Argentinian farmers swap corn for soybeans after export tax hike

Argentina’s farmers are increasingly shifting corn acreage over to soybeans to offset the impact of recent changes to export taxes, the Rosario Board of Trade said.

“The tax changes already impact on the planting intentions,” BCR said, adding that the board expects an annual increase in corn acreage of just 2.6%, down from its previous view last month of 6%.

Corn production in 2018/19 iis expected at 43 million mt, down from 45 million mt previously, but still up from the USDA figure of 41 million mt.

Areas planted later in the year are the most-affected, while early plantings have already started, but at a limited pace due the lack of rains.

In early September, Argentina cut duties on bean, oil and meal exports to 18%, while re-introducing export taxes on all grain exports of ARS4/$.

The change effectively meant that corn and wheat exporters will pay a 10.5% tax, while soybean exporters will pay 28.5%, and meals and oils exporters will pay 25.8%.

BCR now estimates corn planted area at 6.6 million ha, down from its previous estimate of 6.8 million ha, as “corn will be exchanged for soybean plans in order to minimize financial risk”.

That put the revised estimate of soybean planted area at 17.9 million ha, a year-on-year increase of 1.3%, after it previously expected soybean area to shrink before the tax change was implemented on September 3.

“It is very important to highlight that there could be further adjustments in the coming months that affect the level of planting,” BCR said.

Argentinian soybean production is estimated at 50 million mt, BCR said, up significantly on the year as a drought cut output by 40% last season, but below the USDA’s latest view of 57 million mt.

BCR kept its wheat estimate at 21 million mt, although it warned that rains are needed in the next days, especially in the west of Argentina, to attain that forecast.