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Corn+Soybean Digest

Brock Online Notes

Argentina Cuts Soy Crop Estimate
Argentina’s agriculture secretariat on Wednesday cut another 1.7 million metric tons off its estimate of that country’s 2003-2004 soybean crop due to the impacts of dry weather throughout the growing season.

The agriculture secretariat now pegs the soybean crop at 33 million tons (1.212 billion bushels), down from a March estimate of 34.7 million and last year’s crop of 34.8 million tons. The estimate is also 2 million tons below USDA’s current estimate of Argentine production.

Production will fall short of last year’s record despite record soybean plantings of 14.23 million hectares (35.16 million acres), the secretariat said. That planted area is up from a previous estimate of 14.1 million hectares (34.84 million acres).

Earlier in the week, the Buenos Aires Grain Exchange forecast that Argentine soybean production would fall to 33.7 million tons and possibly to 33.2 million tons if yields in northern Argentina were worse than expected.

According to the exchange, yields in the soybelt -- which includes south-central Santa Fe and Cordoba, along with northern Buenos Aires province – were running 25% lower last year. The exchange forecast that final yields will be 14% lower than last year, reaching 2.39 tons per hectare.

The agriculture secretariat left its estimate of Argentina’s 2003-2004 corn production unchanged at 12.4 million metric tons (488.56 million bushels) and left wheat production at 14.5 million tons (532.73 million bushels). The secretariat’s wheat crop estimate is 1 million tons above USDA’s current estimate for Argentine production.

CBOT Plans Corn Ethanol Futures
The Chicago Board of Trade on Wednesday said that it is developing a corn-based ethanol futures contract, with plans to launch trading in the fourth quarter of 2004.

"The move to develop a corn-based ethanol contract is a direct result of discussions with ethanol producers and consumers who are seeking new alternatives to navigate the price fluctuations and volatility that characterize the ethanol market," CBOT Chief Executive Bernard Dan said in a statement.

Dan said in an interview last month that the CBOT was studying an ethanol contract but had no plans to launch one this year. Those plans apparently changed, however, due to rapidly growing ethanol production and pressure from both the ethanol industry and grain traders.

The CBOT's move comes on the heels of the New York Board of Trade’s announcement last month that it plans to launch a sugar-based ethanol futures contract in early May.

Analysts told Reuters News Service that the corn-based CBOT ethanol contract and the sugar-based NYBOT contract could end up as complementary, not just competitive. The NYBOT contract was geared at foreign production, especially in leading sugar producer Brazil.

"Obviously, it will start out to function as institutional hedging. The NYBOT ethanol contract is aimed at Brazilian sugar producers. It's going to be traded in the sugar pit," said Marshall Steeves, energy analyst at Refco.

"The refiners would lean more toward the Chicago contract," Steeves added. "It will be competitive, particularly with the new (gasoline) specifications," he said.

Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at

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