President Javier Milei temporarily scrapped export tariffs on all of Argentina’s crop cargoes in a bid to bring dollars into the country to shore up a market sell-off before a crucial midterm election.
The measure will expire on October 31, or once farmers sell US$7 billion worth of exports. The move may entice them to unload what’s remaining of this year’s soy and corn harvests, and even trade wheat futures, since the tariffs significantly dent profitability – at 24.5 percent for soy meal, Argentina’s biggest export, 26 percent for soybeans, and 9.5 percent for corn and wheat.
But with the official exchange rate under pressure, some growers may prefer to wait it out and bet on a devaluation, which would also improve their revenue in pesos.
“I think there are going to be really strong sales and that the government will easily get the US$7 billion before October 31,” said Erico Weitemeier, head trader at FyO, one of Argentina’s biggest grains brokerages, in Rosario. “Soy prices are going to improve by some US$50 a metric ton, and if farmers believe in Milei they may think the exchange rate will actually strengthen down the line.”
It’s a desperate move by Milei to calm markets concerned that Economy Minister Luis Caputo is on track to sell so many dollars to prop up the peso before the vote on October 27 that there’ll be nothing left to service debt, with a big bond payment due in January.
Milei has also said that he is negotiating with the US Treasury for help, which could potentially come from its Exchange Stabilisation Fund. He is scheduled to meet President Donald Trump on Tuesday in New York.
Shipments of oilseeds, chiefly soy, and grains are easily the biggest contributor of export dollars to Argentina’s economy – even as the country spurs drilling in shale patch Vaca Muerta, boosting the energy trade balance.
Net crop exports this year are estimated at US$29 billion, according to an August 29 report by the Rosario Board of Trade. The bourse estimated that there would be about US$10 billion of cargoes between September and December.
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