MercoPress. South Atlantic News Agency

Soybeans above US$ 615 in Chicago but Argentine producers angry

The war in Ukraine is beginning to have consequences in South America

The threat of a full-scale war has increased fears of shortages in the near future, driving prices up. The ton of soybeans rose 2.4% and closed at US$ 615.45, while corn grew 1.3% to close at US$ 269.19 and wheat climbed 3.6% and to reach US$ 321.87, it was reported.

However, Argentine producers complained the current prices represented around only US$ 200 a ton, after export taxes and the exchange rate gap, thanks to which the Government gets to keep around US$ 395 for every ton.

After a 33% export tax, a ton of soybeans is worth US$ 402 to the Argentine producer. But his prices are expressed in Argentine in pesos at the official exchange rate, so he ends up receiving the equivalent to US$ 205, a TN report showed.

On the other hand, North American producers and those of other countries in the world such as Brazil, Uruguay and Paraguay, who are not subject to export charges or affected by the exchange rate, have a substantially higher profit, Argentine farmer guilds explained.

Soybean futures hit a 9-1/2-year high as the war between Ukraine and Russia also jeopardized supplies of Black Sea sunflower oil, which could lift demand for other vegetable oils, including soy. According to the Rosario Stock Exchange (BCR), “the importance of the Black Sea region in the sunflower oil trade leads to important rises in soybean complex products, with special relevance to soybean oil and vegetable oils in general, since Ukraine and Russia account for about 60% of production and 80% of world trade in sunflower oil.”

Grains and oilseeds markets also remain well supported by poor corn and soybean crop conditions in parts of South America, although forecast rains for dry parts of Argentina and southern Brazil offered some relief.

Tension in Ukraine also “led to redirect purchases of wheat, corn and sunflower oil to alternative destinations.” Russia and Ukraine are the world's first and third wheat exporters, “taking over about a third of the world cereal market,” the BCR noted.

“All eyes are on what's happening in Ukraine, especially for wheat and corn exports,” said Brian Hoops, president of US brokerage Midwest Market Solutions. He added that ”the weather (in South America) is starting to improve, but Brazilian farmers are holding back on sales, so base levels are picking up significantly. That should drive more export business to the US.”