On Monday morning (22), the Argentine government announced that it had eliminated withholding taxes on grains and grain products until October 31. The measure was unexpected and applies to all Argentine agricultural products for export, according to presidential spokesperson Manuel Adorni.
“The old policy seeks to create uncertainty in order to boycott the government’s program. This punishes the Argentine people: we will not allow this,” said Adorni.
The news weighs on soybean futures traded on the Chicago Stock Exchange, not only for grain but also for bran and oil. At around 8:40 a.m. (Brasília time), the three products had already lost almost 1% among the most traded positions.
The main objective of Javier Milei’s government is to support the dollar by increasing the supply of the US currency in the country, while the measure should strongly stimulate the sale of soybeans and derivatives in this little more than a month of zero tax.
According to experts, a measure such as this to zero the export tariff was not on the radar, even with the recent and temporary declines in recent months.
“It was a bombshell, a surprise for everyone, no one expected this measure. Argentina, due to some economic problems and Milei’s election results in the province of Buenos Aires, had been experiencing exchange rate tension, with the peso depreciating against the dollar,” reports Sebastian Gavalda, director of Globaltecnos, directly from Argentina to Notícias Agrícolas.
However, the Argentine analyst points out that the measure has not yet been published in the Official Gazette and “therefore, we need to wait and see the fine print.”
Gavalda explains that Argentina has stocks of approximately 20 million tons of soybeans and 12 million tons of corn still to be sold, which makes them considerably competitive in the international market for both, especially soybeans. For wheat, the volume is around nine million tons.
“Obviously, when you have a measure like this, what we have to watch for is an increase in supply, which could lead to a drop in prices. So, we will see if the market takes this measure as a bearish one. Now, what we are waiting for is the publication in the Official Gazette to understand the details and the impacts,” he says.
