November 9, 2007

 

Argentina's soy prices down sharply on week after export tax hike

 

 

Argentine soy prices fell sharply on the week at the Rosario Grain Exchange Thursday (November 8) after the government announced a steep increase in the export tax on soy, meal and oil, according to analysts.

 

On Wednesday, the government raised the export tax on soy to 35 percent from 27.5 percent and the tax on soyoil and soymeal to 32 percent from 24 percent. Wheat export taxes were also upped to 28 percent from 20 percent, while the tax on corn rose to 25 percent from 20 percent.

 

"The (export tax) increase had a direct impact on the purchase offers from exporters and millers," the exchange said.

 

Spot soy sold for ARS750 (US$239.43) per tonne in Rosario on Thursday, down from ARS815 a week ago.

 

May 2008 soy sold at US$230 per tonne, down from US$238 last week.

 

Despite the fact that farmers have just started to plant the 2007/08 soy crop, 8.2 million tonnes have already been committed for export, according to the Agriculture Secretariat. Soy exports are expected to total 9 million tonnes this season, according to local brokerage Agropuerto S.A. Soymeal and oil export declarations are also at unusually high levels.

 

The government closed the soy export registry Wednesday, but is expected to reopen exports in the coming days when the new taxes take effect.

 

Wheat

 

Wheat futures gained on the week despite the increased duties as the market had expected an even higher tax hike, the exchange said.

 

January 2008 wheat closed at US$185 per tonne, up from US$180 a week ago.

 

The imminent reopening of exports also increased demand for new-crop wheat and pushed prices higher, the exchange said.

 

In March, the government closed the registry for new wheat exports in the face of soaring export declarations.

 

Late last week, agricultural groups warned that only a few days remained before exporters would begin to default on wheat export commitments.

 

However, declaring wheat exports comes with a new hitch. When registering an export contract for wheat, "farmers will have commit a certain percentage to the local market to guarantee (both) the growth of exports and local supplies," Economy Minister Miguel Peirano said when announcing the increased taxes Wednesday.

 

Old-crop wheat slipped on the week. Spot wheat sold for ARS560 per tonne Thursday, down from ARS570 a week ago.

 

Corn

 

The government gave no indication as to when the export registry for corn would be opened, despite the increased export taxes on the grain.

 

In November 2006, the government froze the corn export registry in the face of soaring export declarations. In June, the Agriculture Secretariat announced the reopening of the corn export registry for 3 million tonnes, but the quota was filled within a week.

 

Spot corn was traded at ARS350 per tonne, down from ARS355 a week ago.

 

April 2008 corn sold at US$113 per tonne, up from US$110 last Thursday.