December 5, 2008

Argentina wheat up on export tax reduction; corn, soy down


Argentine soy and corn prices were down on the week at the Rosario Grain Exchange Thursday (December 4), in line with the Chicago Board of Trade, while local wheat prices got a boost from a reduction in export taxes.


As part of a sweeping 13.2 billion-peso (US$3.85 billion) economic stimulus package announced by President Cristina Fernandez on Thursday, the export taxes on wheat and corn were lowered by 5 percentage points, and will be reduced even further if farmers increase output.


Wheat exports will now be taxed at 23 percent, while corn shipments will carry a maximum 20 percent export tax.


Export taxes will be reduced an additional percentage point for each million tonnes of corn and wheat produced over a fixed benchmark, Fernandez said.


The export tax on soy was left unchanged at 35 percent.


While farmers were happy with the move, they still complain that the government's farm policy is stifling the sector.


"It's welcome, but it doesn't go to the heart of the problem, which is the restrictions on exports," said Sean Cameron, president of the wheat growers' association Aaprotrigo.


Wheat prices got a boost from the announcement of reduced export taxes, although the market is waiting for the change to be confirmed through its publishing in the government's Official Bulletin, the Rosario Exchange said.


Spot wheat was traded at ARS405 (US$117.66) per tonne in Rosario Thursday, up from ARS380 a week ago.


December/January wheat was priced at US$118 per tonne, up from US$105 last week.


With corn exports closed, news of the lowering of the export tax had little effect. Spot prices stayed put and the negative mood in Chicago pushed down new-crop futures.


Spot corn closed at ARS260 a tonne in Rosario Thursday, unchanged from a week ago.


April 2009 corn sold at US$89 per tonne, down from US$90.


Falling international soy prices weighed on the local market and volume was low as sellers balked at making many trades at under ARS700 a tonne, the Rosario Exchange said.


Spot soy was traded at ARS670 per tonne, down from ARS710 a week ago.


May 2009 soy was priced at US$185 tonne, down from US$196 a week ago.

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