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Senior Contributor

An avalanche of Argentina's grain in the market

Hello boys,

 

Maurício Macri, the current mayor of Buenos Aires, was declared the elected president of Argentina yesterday. Daniel Scioli, the representative of the incumbent party, assumed that he was defeated. That means that the export taxes of soybeans in Argentina would be reduced gradually by 5% a year from the current rate of 35% by December 10th, when Macri takes office, and the export taxes all other grains would be eliminated as well as all international sales restrictions regarding wheat, corn, oat or sunflower. This morning in a press conference Macri reiterated his position: "I will keep what I have said in the last few months and we will cut the taxes at the day one of my government to bring profitability in the field". Another promise from the next president of Argentina was to fix only one dollar rate in the country (currently there are five different rates), but he did not specify yet when the local currency would be devalued and how these measures would take place. This another move that would boost the gains of Argentina farmers.

 

The president of the Rural Society of Argentina, Luis Miguel Etchevehere, said he expects that the future administration implement the policies promised by Macri.

 

The big issue for the markets here is that Argentina has an estimated stock of soybeans near 20 million metric tons, about five metric tons of corna and over five million tons of wheat. That would be sold pretty soon, according to most analysts, because much better conditions are coming for these farmers.

 

A big worry about future prices?

 

 

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8 Replies
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Senior Contributor

Could you clarify the promised change in export tax Luis

from This interview http://www.cnbc.com/2015/11/10/reuters-america-interview-argentinas-macri-would-push-grains-output-u...

"The 35-percent export tax currently slapped on soybean exports would be cut by 5 points in 2016, and by another 5 points per year during a Macri government, Negri said. The fiscal hole left by the tax cuts would gradually be filled by increased farm income taxes as production climbs, he added."

 

doesn't look like a 30% decline starting next month, more like a 5% decline starting next year.

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Advisor

Re: An avalanche of Argentina's grain in the market

An even bigger worry about politics playing into future prices! All so their farmers are seeing more gains what about are farmers seeing gains it's been five years?
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Honored Advisor

Re: An avalanche of Argentina's grain in the market

Luis.

Did someone in St Louis Missouri dictate that memo....???

 

I don't think there is anything but speculation at this point.... Are the details of tax reform done already??

 

I keep searching satalite imagery and I don't see enough "bagged" beans to furnish seed in Argentina...

The claim is 60% of annual production is held over...    

 

Question is can the government in Argentina afford to loose that much tax revenue?    

 

The press releases are total speculation at this point.......

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Honored Advisor

Re: An avalanche of Argentina's grain in the market

Lets think this thing through a little ------- If there are 30MMT of soybeans being carried over in Argentina .....

Thats around 8.6 billion Dollars worth of beans to be sold.... Or   75 billion pesos, at a 30% tax rate that leaves 25Billion of taxes to be lost in a country that total government budget is 224billion pesos and tax revenues of less... somewhere around 215 billion.....

Are they going to let 25 billion in revenue get away..... Would the world bank let them.....

 

Wonder if the world bank examiners got a good count ??    Smiley Happy

 

The whole things seems like a "good" story...

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Advisor

Re: An avalanche of Argentina's grain in the market

Take a play from Janet Yellen and just print money to your hearts content.  

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Honored Advisor

Re: An avalanche of Argentina's grain in the market

The bear apparently needs fed almost every day.   Is this where I am supposed to be scared of lower soybean prices?   I say bring it on.   Many American farmers can weather the storm.  Let's just see how the rest of the world handles it.  Meanwhile, the winners are the end users.  Who are now already buying their inputs at low levels not seen in years.   I hope they make the most of a good thing.

BTW,  Has anyone noticed the lack of food prices coming down?

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Honored Advisor

Re: An avalanche of Argentina's grain in the market

No     not food ---substantially, not seed, not technology, not new paint,  

 

The producer side of this thing is going to be a quiet ride well into next year.  Then we will see whose still in the car...

 

No my oxygen starved brain just had a vision of a South American bus from some movie.  We may be closer to the door than we should be..

 

 

One thing that is different.  While I am hoping to stay on the bus.  We are seeing lots of job seekers..........

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Senior Contributor

Re: Could you clarify the promised change in export tax Luis

You are right, farsider. I made a mistake and just corrected the info.

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