December 19, 2008

Argentina wheat up on low output; exports seen closing soon
Argentine spot wheat prices were up on the week at the Rosario Grain Exchange Thursday (December 18), as exporters scrambled to get new crop supplies amid expectations that exports would be closed relatively soon.

"Exporters were very active...with sellers responding as they are thinking that one has to take advantage of these good times before the export quota is filled," Roagro Analyst Carlos Boglioli said in a market note.

With the wheat crop struggling due to drought and the low planted area this season, there isn't expected to be much left over for export.

The Agriculture Secretariat cut its forecast for 2008-09 wheat production to 9 million tonnes Thursday, down 1.1 million tonnes from last month's forecast.

Domestic demand will likely rise to 7 million tonnes in 2009 from the 6.1 million tonnes set aside for local use this year, the President of the national trade office ONCCA, Ricardo Echegaray, said in an interview earlier this month.

ONCCA must approve all grain and beef exports and only clears shipments once stocks sufficient to meet domestic demand, as set by the government, have been confirmed.

With domestic consumption pegged at 7 million tonnes that will leave just 2 million tonnes left for export, if current forecasts hold, down sharply from the 10.2 million tonnes of wheat exported from the 2007-08 crop, according to the US Department of Agriculture.

Spot wheat was traded at ARS405 per tonne in Rosario Thursday, up from ARS400 a week ago.

January wheat was priced at US$119 per tonne, up from US$116 last week.

Local soy prices got a boost this week as rumours circulated that the government was planning to lower the export tax on the beans. The speculation follows the government's announcement last week that it would lower the export tax on corn and wheat by five percentage points.

"The government denied press reports that it is about to announce a cut in the high 35 percent export tax on soy in order to compensate producers for the sharp drop in international prices, (but) two weeks ago the government also denied it was about to cut export taxes on wheat and corn just days before it actually did it," Goldman Sachs said in a market note Thursday.

Spot soy was traded at ARS720 per tonne, up from ARS715 a week ago.

May 2009 soy was priced at US$200 per tonne, up from US$190 a week ago.

Spot corn traded at ARS300 a tonne in Rosario Thursday, up from ARS260 a week ago.

April 2009 corn sold at US$100 per tonne, up from US$95.

US$1 = ARS3.4165 (December 19)

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