December 11, 2008

Argentine farmers are holding on to their soy stocks because the government is not willing to lower the export taxes on soy.

Argentina Cabinet Chief Sergio Massa said the country has lowered its export taxes on wheat and corn shipments but did not do the same for soy,

Local press reports had speculated the government was considering lowering the export tax on soy to encourage farmers to sell their stocks. Argentina's farmers have been holding on to extremely high soy stocks from the 2007-08 crop since March.

About 10 million tonnes of soy are stored in silos and other stores. Normally, stocks are around three million tonnes at this time of the year. This year's stocks represent 22 percent of the record crop grown in 2007-08.

Since mid-2008, soy prices have fallen about 50 percent and farmers are hesitant to take their grains to market at current prices.

President Cristina Fernandez announced this week that export taxes on wheat and corn would be lowered by five percent. Further reductions will be put in place if farmers increase output.

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