November 13, 2007

Argentine grain exports still blocked despite expected opening

Argentina's wheat, soy, soymeal, soyoil and corn export registries remained closed Monday, despite assurances from the government that wheat and soy exports would be opened again once new tax hikes went into effect on Monday morning (November 13, 2007).

At the beginning of this month, agricultural groups warned that only a few days remained before exporters would begin to default on wheat export commitments to Brazil and other markets.

The (wheat and soy) registries remain closed and the government isn't accepting export declarations, Granar S.A. analyst Adrian Seltzer said Monday.

Exporters must make a sworn declaration to the government of an export sale before shipping the goods. A reference price for tax purposes and the applicable tax rate are locked in once the company declares a shipment.

The government is apparently studying mechanisms to limit export commitments to ensure domestic supply. 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," Minister Peirano said last Wednesday.

In March, the government closed the registry for new wheat exports in the face of soaring export declarations. The corn export registry has been closed since June. Last week, the government shut down the soy, soymeal and soyoil export registries before announcing an export tax increase on most agricultural exports. Economy Minister Miguel Peirano had said that the wheat and soy registries would be opened once the new taxes came into effect, but exports remained closed Monday - the day the new taxes kicked in.

The corn registry is not expected to be opened for some months.

The tax hikes announced last week are an effort to raise revenue and to shield the domestic market from soaring international commodity prices, according to the government. The export tax on soy was increased to 35 percent from 27.5 percent and the tax on soyoil to 32 percent from 24 percent. Wheat export taxes were upped to 28 percent from 20 percent, while the tax on corn rose to 25 percent from 20 percent. Sunflower seed exports will now be taxed at 32 percent, while sunflower seed oil exports will carry a 30 percent duty.

The export tax on wheat flour remains unchanged at 10 percent.