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 News

11/09/2017 0:00 - Agricultural Commodities Market
FEDERICO DI YENNO
Corn exports gain momentum while soybean sales stagnate

Corn export sales reached 18 million tons as of September 7 while soybean sales barely totaled 6.7 Mt. USDA and IGC published put 2016/17 corn exports from Argentina at 27.5 Mt in August. In the short term, soybean crushing remains robust, while the future of this sector looks promising.

As of September 7, export sales of corn from Argentina (according to official numbers) total of 18 million tons. No matter how much 16/17 corn ends up being exported, there is certainly a long ways to go until we get there. If exports do not keep up this pace, there will be a large carry-over given the additional 8 million tons in production for this year.

 

The International Grains Council (IGC) estimates that next years’ global corn production should stand 56 million tons below the current level. Corn trading, however, are expected to rise to a new record given healthy demand from the European Union, Mexico, Middle East, Southeast Asia and North Africa.

 

In the local scenario, IGC’s latest estimates Argentina's corn exports to stand at 27.5 million tons for the 16/17 marketing year, tight in line with USDA numbers. Purchases of corn by exporters accounts for 19.75 million tons as of August 30, covering all of their exports commitments. This figure shows a 22.6% year over year increment.

At the local grains spot market, corn bids traded in the ARS 2,250 to ARS 2,350 range depending on delivery conditions. Bid/ask spreads remain large for new crop trading, so there is little activity on the horizon.

What to expect from soybean

As discussed in the previous reports, profit margins remain tight for both soybean exporters and crushers.

Soybean export sales remain far behind schedule when compared to past marketing years. Slow farmer selling is expected to continue until early 2018. Excess supply in Brazil hurts the competitiveness of the domestic crop, and the situation could worsen as we approach the US harvest.

 

The local crushing sector received both good and bad news in the last month. The US imposed preliminary countervailing duties on imports of Argentine soybean biodiesel and unnoticed increases in India's import tariffs. On 11 August 2017, the Indian Finance Minister raised the import tax on crude soybean oil by five percentage points to 17.5 per cent and tariffs applied to crude and refined palm oils doubled to 15% and 25%, respectively.

However, some favorable events also took place recently. China is considering importing argentine soybean oil. The European market for soy oil based biodiesel re-opened after several years of imposed punitive tariffs because they considered its exports were unfairly subsidized. On the other hand, imports of soybean oil from India are expected to grow by 500,000 tons (or about 13.5%) in the 17/18 marketing year, according to the USDA attaché in New Delhi. This is explained by lower soybean production in the country and growth in domestic demand.

Despite very low margins for the processing industry, crushing reached 4.3 million tons during July 2017, the second highest record for the month, only surpassed by July 2015.

The domestic Soybean spot market remained very active over the past week. Traded volume increased in account of price settlements and trading in new crop soybeans. Prices for cash soybeans traded in the ARS 4,200 to ARS 4,400 range. Crush plants claimed to have good availability for receiving trucks, so logistics flowed with relative ease. Bids for new crop soybeans rose about 10 USD per ton throughout the week, closing around USD 260 per ton.

 
 

 Institutional video


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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