Argentina uncertainty drives out cash values, buyers wait to see


Cash indications in the FOB Up River Argentina corn market have dried up as market participants digest the changes to the country’s export tax regime and fluctuations in the country’s currency, market sources have told Agricensus Tuesday.

Cash brokers and physical traders across South America and Asia are struggling to get to grips with the shifting and contrary dynamics as Argentina undergoes changes that impose a floating duty for all exports, including corn.

Market sources say price levels for physical bids and offers have disappeared from the market for spot trading out as far as indications for March and April 2019.

“Many [traders] were out yesterday and only today are they starting to review the new rules… it’s still unclear on domestic prices, and the US dollar versus the Argentina peso exchange rate,” one market source said.

There is uncertainty around whether declared export sales from the previous tax regime are subject to the new tax arrangements, with a spike in export registrations late last week heralding the announcement from Argentina’s government.

“Nothing is clear,” a second source said, describing the market as “dead”.

Neighbouring Brazil has also seen activity dimmed, with few physical indications quoted and trading activity muted, even though the weaker currencies in both nations should stimulate export interest.

“[The] currency is helping exporters, but what we need is for demand to show… everybody is long in Brazil,” but traders are waiting to see whether the export changes will hit Argentina’s competitiveness as the country has been an aggressively-priced origin recently.

“Let’s see how Argentina reacts to the new taxation,” a Brazil-based source said.

The confusion extends to Asia as well, which has been a significant destination for Argentinian corn in recent weeks, particularly major export destinations like Vietnam.

“All buyers are waiting to see the market; there were no offers from Argentina yesterday so they’re waiting for some definition,” the Singapore-based market source said.


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