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13/09/2017 0:00 - Agricultural Commodities Market
EMILCE TERRÉ
Updated projections of Argentina's wheat balance sheet 2017/18

Argentina’s wheat production for the 2017/18 marketing year should end up in the 16 to 16.5 million-ton range, assuming yields develop to trend level. As a result, export shipments should fall around 1 and 1.5 million tons, and even then ending stocks will end up near historic lows.

Over the previous week, official estimates of sowing area and crop production for the 2017/18 marketing year were published. These include estimates on wheat production, which should amount to around 16 and 16.5 million tons, giving way to a drop of at least half a million tons when compared to the previous season. This projection is based on an assumption of a planted area of 5.45 million hectares and yields of 3.12 tons per hectare.

If we assume that ending stocks remain unchanged in the following season, there should be around 10 million tons available for export after accounting for domestic consumption, which would result in a 11% drop in total export sales from the current campaign.

 

In this context, exporters have been looking to originate wheat as soon as possible. Export sales commitments have advanced at a much faster pace than in previous years, amounting to over 390,000 tons, more than double than last year. On the other hand, forward purchases of wheat are the largest in a decade, reaching 3.1 million tons by August 30, a 250% increase over last year.

In a context of tight margins for exporters, the downtrend in wheat prices established since mid-july triggered buying opportunities. If we look at MATba wheat futures, prices for December wheat have dropped almost 8% in the past two months.

With less wheat available, the bidding for the cereal could get nasty ahead of the new crop. Should exports be 500,000 tons over the expected remained of 10 million tons (as some think tanks project); carryover could reach new historic lows.

 

All of this will depend on the willingness to buy from our main clients, although Brazil’s harvest is already projected to be the lowest in five years. USDA also estimates that US wheat imports should rise in light of tight supply of hi pro wheat. In this context, there is serious upside for domestic wheat prices after the harvest

 

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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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