December 30, 2003

Argentina Soy Prices Marginally Lower After 23-month High

Soy prices in Argentina closed marginally lower after hitting a 23-month high in the prior sessions. This correction mirrored losses in Chicago's short-term futures contracts, traders said.

Soy closed at 650/652 pesos per ton ($219-$220) in the main soy-trading port of Rosario. Prices peaked at 654.7 pesos last Friday following confirmation of the first mad cow disease case in the United States.

Trade in Rosario reached 30,000 tons, down from 35,000 tons on Friday.

"Prices fell because Chicago closed down ... but I think the market will generally stay firm," a Rosario-based trader said.

The local market tends to track movement in Chicago, where short-term soy futures closed down on commercial and light speculative sales.

Prices in Chicago rose sharply last week on hopes that the U.S. government will ban the use of meat and bone meal as sources of livestock feed, which would boost immediate demand for high-protein soymeal.

But even if the ban were implemented, the Argentine trader said he believed prices would eventually flatten out.

Government officials privately put the 2003/04 soy crop at a record 37 million tons in Argentina -- the world's No. 3 soy producer after the United States and Brazil. The U.S. Department of Agriculture sees output of 36.5 million tons.

In Rosario 2003/04 soy for delivery in April or May closed down $1 at $206 per ton. 2002/03 soy closed stable at 650 pesos in Bahia Blanca and lost 3 pesos to close at 637 pesos in Quequen.

(US$1 = 2.96 pesos)