March 20, 2008

 

Argentina spot grain market still stalled on tax protest

 

 

Argentine grain trade remained stalled at the Rosario Grain Exchange on Wednesday as traders chose to sit out the spot market to protest a sharp increase in the soy export tax imposed by the government last week.

 

However, grain futures markets continued to function normally, as traders needed to adjust positions daily, Panagricola analyst Ricardo Baccarin said.

 

Futures trades are generally conducted electronically.

 

The trading floor was empty again, with no spot trades taking place since last Thursday, Rosario Grain Exchange analyst Lorena D'Angelo said.

 

Markets will be closed on Thursday, Friday and Monday for the Easter Holiday.

 

Argentina's farmers have been on strike since last Thursday. The country's four leading farm groups announced Wednesday that they plan to extend the strike through next week if the government does not abandon the new tax scheme.

 

Government officials have made it clear that a revision of the new taxes is not on the table. On March 11, the government announced a sweeping overhaul of the export tax structure on grains and derivative products. A sliding scale was implemented with rates increasing as export values rise.

 

The export tax on soy was raised to 46 percent from 35 percent based on the government's March 11 FOB reference price of US$538 per tonne.

 

The tax on wheat and corn exports decreased by about one percentage point. Increased export taxes depress domestic grain prices since the local value is determined by subtracting the tax rate from export prices.

 

Spot wheat has not been traded in Rosario since February 11, when it closed at ARS570 (US$180.52) per tonne.

 

Spot soy last sold for ARS850 (US$269) per tonne on March 12. May 2008 soy traded Wednesday at US$276, down from US$307 on March 11.

 

April 2008 corn sold traded at US$151.50 a tonne Wednesday, down from US$162 last Wednesday.