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Argentina sees record soy prices due to drought in US heartland

BUENOS AIRES, Argentina -- America's loss is Argentina's gain. Record soy prices due to a punishing drought in the U.S. heartland are expected to create billions of dollars in new revenue for the South American country, which is the world's third-largest soy producer behind the U.S. and Brazil.

Prices for soybeans for August delivery gained 50.25 cents, or 3 percent, to end at US$17.3375 a bushel. Corn also beat its all-time high of a year ago, with September deliveries rising 12.75 cents to finish at US$8.0775 per bushel. September wheat also rose a sharp 31.75 cents to close at US$9.35 per bushel on the Chicago Board of Trade, its highest prices since 2008.

A U.S. drought has reduced supplies of the very grains Argentina grows in abundance _ mostly to China, which buys 80 percent of Argentina's soy. Global grain supplies also are under pressure from lowered estimates in Russia and an “underperforming Indian monsoon” season, Barclays Capital said in its commodities briefing on Thursday. Meanwhile, Chinese demand remains strong, so supplies will likely remain tight until the next South American harvest, the report said.

Argentine soy producers still have nearly a third of their last harvest in silos and expect windfall profits now that they can sell at record highs. Since Argentina's latest budget was based on soy selling at US$440 a ton, the government also expects major new revenues from its 35-percent take in export taxes.

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In this Monday, July 16 photo, a farmer peels back the husk from an ear of corn damaged by weeks of extreme temperatures in Illinois. Record soy prices due to a punishing drought in the U.S. heartland are expected to create billions of dollars in new revenue for the South American country. (AP)

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