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Argentina said to flood export market with cheap wheat

Argentina is poised to release onto world markets a fresh batch of wheat exports whose low prices are creating nerves even in the Black Sea, often seen as the most competitive origin for exports of the grain, according to

The South American country is expected to approve "at least" 1.4 million tonnes of additional exports of wheat left over from the last harvest, Amado Boudou, the Argentine economy minister said.

Oscar Solis, deputy agriculture secretary, put the figure even higher, saying that "between 2.5 million -3.5 million tonnes will be freed".

The announcements, which come as Argentina frees up storage capacity to make way for the newly-begun 2011-12 harvest, follows the emergence of the country as the lowest-cost supplier – with its wheat coming in some $15 a tonne cheaper than Black Sea supplies at the latest Egyptian grain tender.

In Moscow, SovEcon noted Argentina's increasing competiveness, at a time when Russia's own prices are fairly static at roughly 7,000 roubles a tonne at port including delivery, in forecasting a continuing decline in the former Soviet Union's own shipments.

"Freight costs of Argentinian wheat to Egypt is still $25 per tonne higher than the freight from the Black Sea ports, which makes Argentine grain uncompetitive on the Egyptian market yet," SovEcon said.

Nonetheless, Russia's exports in the January-to-June period, the second half of 2011-12, "are expected to decline as international prices are weakening, while domestic prices are stabilising and even strengthening".

While Russia's exports are to hit a bumper 16.5 million-16.8 million tonnes in the first of the season, this figure conceals slower shipments expected for this month, at 2.5 million tonnes, and next month, at 1.5 million-1.8 tonnes, down from 3.2 million tonnes in September.

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