Forward sales of Argentine corn and soyabeans are zooming higher versus last year as growers hedge against possible increases in export taxes under President Alberto Fernandez, who is set to take office on Dec. 10.
With nearly half of this year's corn already sown, and soya planting recently begun, farmers have sold 12.4 million tonnes of corn and 7.2 million tonnes of soya versus 4.6 million and 2.9 million, respectively, at this point last year.
Peronist Fernandez thumped Argentina's business-friendly incumbent leader Mauricio Macri in the October election. The Peronist party has traditionally supported more government intervention in the economy, including higher export taxes.
"I have already sold almost everything. It is not worth waiting," farmer Jorge Bianciotto, who manages about 4,000 hectares in the town of Pergamino, told Reuters. Pergamino is in the northern part of the bread-basket province of Buenos Aires.
Export taxes are paid by export companies, which in turn discount the expense from the prices they pay farmers for their crops. Under Argentina's $57 billion lending deal with the International Monetary Fund, Argentina currently taxes soyabean exports at about 25% and corn and wheat at 6.7%.
Exporters are keen to lock in supplies now, to avoid the risk that farmers might refuse to sell their crops later if taxes go up. Growers are also keen to sell before any future export tax increases are factored into the price they get for their grains.
It is widely expected in Argentina's farm industry that export taxes will increase under Fernandez. He was elected by a wide margin last month when voters punished Macri for the poor state of the country's recession- and inflation-plagued economy.
Macri was elected with nearly monolithic support from farmers who liked his free-markets platform. He ditched the previous administration's trade and currency controls and drastically cut export taxes. He promised to "normalize" the country's highly regulated economy but his reforms failed.
Comments
Comments are closed for this article.