Argentina launches floating export tax, grains and oilseeds hit

Argentina has overhauled its export regime for grains, oilseeds and any derivative product on Monday after President Mauricio Macri said he would ask exporters who have benefitted from a collapse in the peso to do more to help the country eliminate its primary fiscal deficit next year.

The measure, at current exchange rates, effectively introduces a 10-11% tax on grain exports and increases current export taxes marginally on soybeans, soyoil and soymeal.

It also effectively halts the gradual reduction of soybean, soymeal and soyoil taxes that had been planned for 2018 and 2019.

In a television address President Macri acknowledged the measures, which are a reversal of a key 2015 election pledge of his to remove export taxes on corn and wheat and gradually reduce them for soybeans, were "a bad tax", but said that emergency action was needed.

On September 3, Economy Minister Nicolas Dujovne announced that the duties on soybean exports, which currently stand at 25.5%, will be immediately cut to 18%, while soyoil and soymeal taxes, which stand at 23%, will also be cut to the same level. 

However, simultaneously the country will reintroduce a so-called retention on all primary exports of 4 pesos per US dollar of goods exported, which at current levels of 38.25 pesos to the dollar amounts to a tax of 10.5%.

Other, non-primary exports, which is thought to include meals and oils, will have to pay a tax of 3 pesos for each US dollar exported – effectively amounting to a 7.8% tax at current exchange rates.

The move effectively means that exporters of corn and wheat will pay a 10.5% export tax, soybean exporters will pay 28.5%, and exporters of meals and oils will pay 25.8%.

The measure will be effective September 4 and remain in place until 2020, Dujovne said.

Bullish

"I would imagine this will have a bullish impact on prices," said one market source, while another said it would "maybe create a shortage on meal and oil exports."

Futures trading on the Chicago Board of Trade was suspended on Monday due to a Labor Day in the US.

On Monday, the IMF granted the Argentinian government's request for an early release of a $50-billion bailout package in return for a pledge that the country would put in place plans to eliminate its primary fiscal deficit next year.

Argentina had agreed previously to cut that to 1.3% and eliminate it by 2020 – a year later.

On August 31, the Agriculture Ministry had issued a resolution temporarily suspending a reporting mechanism which tracks exports for soybean, soyoil, soymeal, pellets and other products containing soy, as well as for other grains, effectively curtailing exports of those products until further notice.

Fearing the imposition of new duties on exports, domestic exporters had registered anticipated sales of nearly 8 million mt of soybean, corn and wheat valued at $2.2 billion over the past few days.

In another move to reduce expenditures, the government reduced the number of ministries.

The Agriculture Ministry was downgraded to a Secretariat of State, which would be likely absorbed by Production Ministry, according to local press reports.