Argentine corn sowings could rise 25%

21.07.2016

Corn sowings in Argentina could rise 25% this year, analyst Dr Michael Cordonnier said, as local press suggests that the government is rethinking a pledge to cut soybean export taxes.

The Clarin newspaper last week reported that the Argentine government are mulling a decision to keep soybean export taxes at 30% next year, rather than cutting them to 25% as promised.

It is believed that President Mauricio Macri will announce the decision on July 30, when he attends a large national farm show.

Promise of reform

Mr Macri was elected at the end of 2015, on a reforming ticket.

Key to Mr Macri's platform was the elimination of export taxes on most agricultural products, in a bid to boost the country's moribund agriculture sector.

Soybean export taxes were lowered to 30%, from 35%, with the intention to reduce the tax by 5 points a year until it was eliminated.

Revenue problems

"The problem is apparently the government needs the revenue," Dr Cordonnier told Agrimoney.

Dr Cordonnier said that "raging" inflation was hurting consumers in Argentina, and taking the sheen of Mr Macri's pledge to reform the economy.

"The economy is not where he promised it would be when he was elected," Mr Macri said.

At the same time, soybean prices have rallied over the last six months, supporting farmers. "They are starting the think the farm sector should shoulder some of the pain," Dr Cordonnier said.

Planting intentions on hold

The agricultural sector is on edge over the decision, as it will inform their planting intentions come September.

"Farm groups are saying we have to know," said Dr Cordonnier.

Dr Cordonnier noted that the tax decision wil have "more importance to farmers in northern Argentina," where "yields are lower, and transportation costs are higher".

Dr Cordonnier noted that even a sharp swing to corn would do little to reduce soybean acres, given that farmers in Argentina currency grow far more of the oilseed.

"I think they are going to increase the corn area 20-25%," he said, with soybean are down some 1-2%.


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