Argentina Govt, Exporters Reach Corn, Wheat Export Deal
Argentina’s grain exporters reached a deal with the government late Tuesday to pay farmers a higher price for grain in exchange for export permits, a representative of the CIARA-CEC oilseed and grain exporter chamber said Wednesday.
Under the deal, exporters will buy three million metric tons of 2009-10 corn and an additional 1 million tons of new crop wheat at a theoretical price set by the government. In exchange, the exporters will be ensured export permits for the surplus wheat and corn from the 2009-10 crop.
Spot corn traded for 449.60 pesos ($119) per ton at the Rosario Grain Exchange on Tuesday, while the government’s theoretical price that farmers should receive was set at ARS527.
The new deal is expected to boost local corn prices, which have been trading at a discount due to a risk premium because of the government’s intermittent closing of exports. Still, stocks of wheat and corn over domestic demand will have to be confirmed by the agricultural trade office, or ONCCA, before the exports will be approved.
The agreement follows a similar deal struck last month for wheat exports. On May 4, President Cristina Fernandez said exporters agreed to buy 1 million tons of old crop wheat at full price, which is the theoretical Free-Alongside-Ship price minus the 23% export tax. Exporters will then have to sell that wheat back to local millers at market price. In exchange, the exporters were guaranteed authorization to ship 1 million tons of 2009-10 wheat. Local prices jumped over 20% following the agreement, with exporters back in the long-dormant wheat market.
Source: CME News for Tomorrow