Argentina has suspended for six months its program of gradually cutting taxes on exports of soymeal and soyoil, the Treasury Ministry said in a statement on Tuesday, part of the government’s fiscal tightening program. International shipments of both soy products are currently taxed at 23%, lowered gradually from 32% in 2015, the statement said.
By the end of 2019, soymeal and soyoil export taxes will be at 18%, it said, compared with the 15% rate planned before the suspension.
“We expect a sharp drop in soymeal and soyoil exports in the upcoming season. So we will look for the opportunity to have a dialogue with the government about reversing this measure, which we think goes against the best interests of the country,” Gustavo Idigoras, head of soyoil industry group CIARA.
Argentine soy planting starts in late September, with harvesting concentrated in April and May.
Beginning after the next harvest, Argentina had expected to export significant amounts of soymeal to China as the country moves to take advantage of an ongoing U.S.-China trade dispute. Argentine officials were in Beijing earlier this month to finalize the paperwork needed to ship livestock feed to China.
Argentina is the top global exporter of soymeal and soyoil, but drought slashed the country’s soybean harvest this year, pushing some global buyers to instead buy soymeal from the United States. The president Macri administration estimated soybeans crop loss at US$ 8 billion.
Argentina, which in recent months has also booked rare imports of U.S. soybeans, has said it would continue reducing taxes on exports of whole beans.
Following the announcement, global benchmark soymeal futures surged over 2 percent on the Chicago Board of Trade (CBOT) , hitting a two-week high of $336.50 per short ton.
Cutting agricultural export taxes has been a high priority for president Macri, who was elected in late 2015 on a free markets platform. But the economy has been shrinking and the country’s peso currency has weakened against the dollar, forcing the country to seek a US$50 billion standby financing agreement with the International Monetary Fund. Deficit reduction is a key part of the IMF deal.