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29/01/2018 0:00 - Agricultural Commodities Market
EMILCE TERRE
Draught, oil and dollar: a strong cocktail for summer crops in Argentina

Dry weather in Argentina together with a lower tax on soybean complex exportations, rising oil prices and a weaker dollar in the world in times where Argentina’s value for the US dollar has been rising, combine to support soy and corn prices in the domestic market.

Reference Price for WTI crude oil at NYSE raised above US$ 66/barrel, 150% above February 2016’s price. A stronger price for crude oil boosts commodities price as input prices for their production and transportation goes up, at the same time that alternative fuel options become more attractive.

Meanwhile, the Dollar Index .DXY fell 15% with regards to the value it had at the beginning of 2017, giving support to the commodities valued in terms of that currency in the world markets, and, at the same time, Argentinian peso has lost ground relatively to US Dollar, cheapening our goods even further for foreign buyers (as long as domestic prices don’t go up by the same percentage).

In this context, the aggravating weather conditions for soy and corn development in Argentina boosted prices even higher last week. Being Argentina the main exporter of soybean oil and soybean meal to the world, any disruption in our supplies will have a strong impact on global markets, explaining why soybean meal futures were the ones leading the rally (we should note that soybean oil is easily substituted by other kinds of oils like the one derived of palm, but soybean meal is very difficult to substitute as animal feed).

As a result, prices at Rosario Cash Market went up between US$ 5 and US$ 7 per ton. Soybean 2017/18 to be delivered next May finished last week at 270/ton, while corn to be delivered between next March and May was paid at US$ 155 per ton in the domestic market. With higher prices, volume traded in the market was also well above previous weeks.

Meanwhile, crop conditions in Argentina keep deteriorating and, on top of that, weather forecasts don’t give any hope of putting an end to the drought spell. The map below show soil moisture evolution for the last 3 weeks. It can be seen that the provinces of Buenos Aires and La Pampa are still in very bad shape for growing summer crops. February will be a key month in defining yields for late soy and corn, but current conditions are already curtailing production prospects for next season in Argentina, and forecasts for a prevailing Niña (associated with rains below normal) for the entire summer are terrifying.

 
 

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Institutional Video of the Bolsa de Comercio of Rosario (Rosario Board of Trade)

 Rosario Board of Trade

The Rosario Board of Trade is a centennial institution located in Rosario, in the most important agroindustrial zone of Argentina. Throughout its history it has created and boosted transparent, solid and reliable markets: the Grains Physical Market, the Futures Market, the Capital Market, and the Livestock Market.

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Bolsa de Comercio de Rosario Córdoba 1402 - S2000AWV
TE: (54 341) 5258300 / 4102600
Rosario - Santa Fe - Argentina

Oficina Buenos Aires Reconquista 458 piso 7° - C1003ABJ - Cdad. de Buenos Aires.
Tel: (54 - 011) 43280390/1484 43939391/9649- Fax: (54 - 011) 43939649
contacto@bcr.com.ar