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 News

03/10/2017 0:00 - Agricultural Commodities Market
FEDERICO DI YENNO
Wheat prices soar on low stocks

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 income.

 

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 29.

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

 

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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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