Half of Argentina's soy crush capacity could idle on tax delay: Ciara

The suspension of Argentina's export duty reductions on soymeal and soyoil is likely to have a major negative impact on the domestic crushing industry and see over half the country's capacity idled, Gustavo Idigoras, the head of the country’s oilseed industry chamber Ciara, told Agricensus Wednesday. 

The chamber expects the average idle capacity could reach 50% or higher, compared to a current average idle capacity of 40%.

“This measure will paralyse new investments in the crushing industry and would also lead to the shut down of crushing plants,” Ciara said in a statement.

In the first half of the year, soybean crushing totalled 18.47 million mt, down compared to 21.37 million mt in the first half of 2017, according to the latest data available from the Agriculture ministry.

The executive said that the chamber would request a meeting with President Mauricio Macri with the backing of the Rosario Stock Exchange (BCR) and Buenos Aires Grain Exchange (BAGE) to analyse the impact of this measure in the crush sector.

“We are currently assessing the overall impact of this decision,” Idigoras said.

Idigoras also said that the suspension would also negatively impact the domestic price of soybean and will generate lower exports of both products.

Tight margins

Gustavo Lopez, director at local agribusiness consultancy firm Agritrend, also told Agricensus that the change would negatively impact both soybean producers and crushers.

“I think this is a very bad news for soybean producers and crushers. This decision will possibly generate a decrease in the domestic soybean prices of around $8-10 per mt,” the analyst said.

“The government did not alter the programme to reduce soybean export duties. However, the crushing industry is key to define the prices of the soybean and it currently has very tight margins,” he said.

Lopez also said that the measure will also result in lower crushing activity for the rest of the year and higher idle capacity for crushing plants.