Over the last week, wheat got the highest price gain, rising about USD
7.5 per ton. Export and milling demand remains strong, while estimated
final stocks plummeted to record lows for the 2016/17 MY. Income from
wheat exports has increased 500 million dollars when compared to the
same date of the last marketing year.
Cash prices soared over the past week
Wheat cash prices gained USD 7.5 per ton in recent days because of demand
from exporters and local mills, as well as sliding ending stocks for the
current marketing year. Wheat ending stocks are estimated at 800,000 tons,
a record low for the campaign that ends next November.
Wheat prices measured in ARS per ton increased more than the depreciation
of the peso against the US dollar. Banco Nación's buyer exchange rate rose
from ARS 17.17 / USD to ARS 17.39 / USD from Friday 22 to Thursday 28.
Meanwhile, the reference price of wheat for Rosario delivery went from $
2,760 per ton to $ 2,940 ton. Traded prices for wheat delivery to Quequén
and Bahía Blanca had similar behavior.
The recovery in wheat cash prices has been accelerating since the end of
August, when it traded at USD 152 per ton. Over September, it accumulated a
gain of US $ 16 / t.
Over December and the first eight months of 2017, wheat exports from
Argentina rose 9.8 million tons of according to export data from INDEC. In
the previous marketing year, exporters dispatched only 6.9 million tons
over the same period. Thus, despite the fall in average FOB wheat prices,
(the volume-weighted average is USD 179 per ton for this MY), the larger
volume of exports generated an additional 500 million dollars in export
As of September 20, the export sector and the milling industry have already
acquired 96% of the 2016/17 harvest. This ratio is 7 points above last year
and in line with the average of the last five MY.
Wheat export commitments reached 11 million tons on September 27, according
to the DJVE published by the Ministry of Agroindustry. With only 1 million
tons remaining without firm export commitment, and almost 10 million tons
exported in August, it is not surprising to see a premium in the prices for
cash wheat, bearing in mind that the final stocks 2016/17 is estimated
below the million tons.
This strong demand from the export sector is accompanied by positive local
milling volume. As August, mills grounded 4.3 million tons of wheat, up 5%
from last year. In spite of being a positive data compared to the last
marketing years, the figure is well below the ground in 2011/12 (4.7 Mt)
and in the previous ones.
The increasing prices are also for the 2017/18 harvest
Harvest prices also recorded a significant gain. Bids for export wheat to
be delivered in January started around USD 170 per ton, but rose about USD
5 over the week.
The volume of new crop wheat already purchased by the export sector is
already 160% above its five-year average, having reached 3.31 million tons
as of September 20. Export commitments (according to the DJVE register) for
the 2017/18 MY amount to 583,000 tons as of September 27, so exporting
companies have a more than adequate supply to meet their obligations.
Corn prices return to ARS 2,400 per ton
Local corn prices gained a little over USD 2.5 per ton between Friday 22
and Thursday 28, according to the BCR's CAC reference prices. In pesos, the
value of the grain had not reached ARS 2,400 per ton since August 9.
Globally, the price of cereal enters a downtrend at this stage of the year
because of the beginning of the U.S. harvest. The most important piece of
data for the market on this commodity will be the U.S. final stocks of the
campaign 16/17 that is scheduled to be reported in the afternoon of Friday
At the domestic level, purchases by the export sector are remain at a good
pace, reaching 21.2 million tons as of September 20, as reported by the
Ministry of Agroindustry. With export sales of 19.3 million tons, the
weekly pace of purchases is likely to continue at least in the short term.
Corn trading in the local spot grain market was very active over the past
week. Corn prices for delivery between April and May rose to USD 147 per
ton. Nevertheless, there was significant interest in acquiring corn for
March delivery, with bids starting at USD 150 per ton. Bids for delivery in
the June-July period came in at USD 143 per ton.
Trading for new crop corn is very dynamic, but the seeding procedures
remain behind schedule according to data from the Rosario Board of Trade’s
Strategic Guide for Agribusiness. Last September was the rainiest September
in the last 45 years. Almost 500,000 hectares of corn are still missing in
the core region. The rains do not take a rest; this raises serious
uncertainties for corn planting and corn quality in the most affected areas