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 News

28/11/2017 0:00 - Agricultural Commodities Market
FEDERICO DI YENNO
Local corn sales overwhelms soybeans trading

16/17 MY corn purchases by the export sector in the week ended as November 15 totaled 287,000 tons, being 5 times higher than the same week of the last MY. This corn volume correlates with good farmer selling pace at the cash market. Meanwhile, soybeans maintain a low trading volume. Crushing plants only bids for stocks deliveries in late December.

Corn 16/17

Atypical week, bounded in the local operations for the holiday of Monday 20th in Argentina and the holiday of Thursday 23rd in the United States. Even so, the corn negotiation was very active in the BCR's trading floor. The market was characterized by a greater number of buyers bidding for the old and new corn crop. We could observe a large number of deferred positions for corn delivery. This scenario of forward prices, which reach deferred positions up to November 2018, has not been seen for a long time. In recent years, the short and medium term was the main focus of the trading volume.

In terms of volume, most of the operations were concentrated in corn with immediate delivery and mainly with contractual delivery for the month of December. The open bids closed the Friday 17th at AR $ 2,350 / tn. In the last week the values ​​reached $ 2,400 / tn for immediate delivery, while traded values could be between AR$ 2,420 / tn and AR$ 2,430 / tn for both deferred month deliveries and immediate delivery.

As it appears from the operations reported between the week of 11/17 and 11/23 until 4:00 p.m. in SIO Granos platform, operations were reported for 40,668 tons of corn to be delivered (firm price and to be fixed) in North or South Rosario. The delivery period covers the end of November and the entire month of December. The weighted average price of the operations with firm price in pesos in the period indicated was $ 2,400 / tn, these operations were similar to the BCR’s floor trading values. For November delivery, only 2,452 tons were included in the previous total.

Corn 17/18

The largest bid volume was seen in deferred March / April contracts. The actual bids stands at around US $ 143 / tn. The forward price curve has a positive slope as May, falling in the months of June, July and August, to return to higher values ​​on September. The curve of forwards prices offered by the buyers in the BCR’s trading floor is similar to the one evidenced in the MATba’s futures prices.

This price behavior is mainly explained by the pattern of the local harvest. In the months of April and May, soybean crops are harvested before corn. Therefore, the bigger supply in these months makes the new soy crop trading a priority. This priority it is to be expected for the new soy crops and the big old crop, stocked by the farmers. So on, this discrepancy in the relative supply of both coarse grains generates a bottleneck, causing corn to be paid more on those dates to generate and fulfill corn export commitments. Thus, the greater importance of the second corn crop in the months after May generates this "sawn" local price curve.

 

Corn exports looks promising

16/17 corn purchases by the export sector reached 24 Mt as November 15. This figure is 31% higher compared with the same date of last year. Thus, as of November 15, the export commitments (DJVE) accumulate 22.5 Mt (computing all varieties of corn) while at the same date last year this value was 21.3 Mt. Comparing values, unlike the past MY, in the actual season exporters have completely covered their export commitments, so price increases in pesos are less possible in the short term. Even so, export business is expected to follow the good pace evidenced so far this year, due to the good farmer selling and acceptable export margins. According to NABSA Line-Ups, November corn exports could exceed 2 Mt.

 

The priority of the corn business leaves soybeans in the background

In the last week, bids prices in the BCR’s trading floor were higher than previous week. This increase came from a spill over in the increase of soybeans CBOT prices. Bids started at AR$ 4,500 / tn reaching even AR$ 4,550 / tn in the middle of the week. Thursday trading was almost identical to Wednesday's due the U.S holiday. Therefore it can be said, that during the week there were “two less genuine trading days” due for holidays in Argentina and EE.UU.

The traded soybeans volume for immediate delivery was very low. Even so, buyers are very interested in settling contract prices. Apparently there would be many prices to be fixed in November and December. This could add a premium for the available stock until the end of the year. So on, it can be seen that contracts with prices to be fixed are twice the average of the last 5 years as of November 15. Meanwhile, compared to the 15/16 MY there are 600 thousand tons more of soybeans with prices to be fixed at this time of the year.

 

On the other hand, in the very short term, the crushing sector is not showing too much interest for biddings. Although the stocks held by this sector, of 1,766,502 tons, is the lowest in 3 years for November, since Friday 17th there are no offering prices for soymeal exports. According to JJ. Hinrichsen, in the last week, it was a very difficult week to get export offers from the crushing sector. The plants look very neat in their sales while seeking to defend the premiums of their export prices. The margins calculated by the BCR for this sector are very tight while the farmer sales in the domestic market are very limited.

 

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 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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