Crop U-turn peeves importers, lays bare Argentina's infighting

Argentina’s chaotic reversal on corn exports could hurt its standing among the world’s top grain suppliers as buyers get exposed to the unpredictability of government feuding.

The South American powerhouse food provider ditched moves to intervene in shipments – first through a ban and then a daily cap – after ceding to the might of farmers and their export dollars.

A faction of the government close to leftist Vice-President Cristina Fernández de Kirchner backs decoupling local and international food prices by putting up hurdles to exports. But allies of President Alberto Fernández try to keep such protectionist ideology in check.

The infighting played out for global crop markets just as tighter corn supplies in the United States mean buyers and traders are paying more attention to Argentina, the world’s third-biggest exporter. Vietnam, Malaysia, Algeria, Egypt, South Korea and Peru are among the largest importers of Argentine corn.

“This breaks down trust,” said Arlan Suderman, chief commodities economist at StoneX in Kansas City. “If you’ve been buying from Argentina you’ll be more cautious about commitments and whether they’ll be kept.”

The dilemma of boosting farm exports that are key to Argentina’s economic fortunes or reining in food inflation through protectionism dates to the 2019 election campaign, when Fernandez sent mixed messages. Last year, he sought to nationalize bankrupt soy exporter Vicentin SAIC before backtracking due to protests.

Market-oriented approaches appear to be winning based on the outcomes of corn exports and Vicentin. In both cases, the year-old government caved after farmers showed their teeth and the specter of agriculture protests in 2008 – when Fernández de Kirchner was president and Fernández her cabinet chief – began to loom. A prolonged trade strike could have jeopardised export dollars that the central bank needs to shore up the peso.

The government will especially prefer export dollars over intervention in crop or livestock shipments ahead of October’s midterm elections, said political analyst Sergio Berensztein, who runs a Buenos Aires consultancy firm. Argentine voters are even more sensitive to currency devaluations than food inflation, he said.

The peso has lost 30 percent in the past year while food prices are 42 percent higher than 12 months ago.

“A conflict with farmers implies fewer dollars and fewer votes in October,” Berensztein said.