Argentine soybeans facing tax increases

MarketsFarm — Not many major divergences can be seen between the U.S. Department of Agriculture’s data (USDA) on Argentina’s soybean crop and data from the department’s attaché in Buenos Aires.

What may bring changes to the country’s soybean industry are tax increases imposed by the new federal government, according to Benjamin Boroughs, the USDA attaché.

The center-left government of President Alberto Fernandez increased export taxes on soybeans, soymeal and soyoil to 30 per cent and nine for other agricultural products on Dec. 14.

A week later, the government received the authority to further hike export taxes by another three points for soybeans and soy products and six points for other agricultural goods, in an emergency. Boroughs said the government’s move was to increase revenues to expand the country’s social services as a means to stimulate its troubled economy.

Prior to Fernandez being sworn in, Argentine soybean growers marketed a large portion of their crops in anticipation of the tax increases. At this time, it’s unclear whether the government will honour the previous tax rate for those soybeans or not, the attaché’s report stated.

Although dry conditions have continued to be a concern, especially in the provinces of Buenos Aires, La Pampa and Cordoba, Boroughs reported 2019-20 soybean production is still pegged at 53 million tonnes. That would be grown on almost 44.5 million acres, up slightly from USDA’s estimate of 43.2 million, but with a small decrease in yields.

There was a wider difference in ending stocks, with USDA’s forecast of almost 6.6 million tonnes compared to Boroughs’s call for 11.1 million. The attaché cited larger beginning stocks, imports and total supply combined with less domestic consumption and a smaller crush.

That smaller crush has a direct correlation to the financially troubled Vincentin. The largest crusher in Argentina shut down operations at some of its facilities in December.

Along with selling off assets and restructuring its debt, Vincentin has been seeking financial help from the Fernandez government. Boroughs didn’t state if the company received a reply from the government.

— Glen Hallick reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.