MercoPress. South Atlantic News Agency

Will Argentina squeeze exporters as soybeans rise above US $ 600 in Chicago?

Will the Argentine producer earn more or will the State keep the difference?

Argentine economists are eyeing the recent increase in the international price of soybeans as some sort of light at the end of the tunnel following a severe recession, high indebtedness amid the coronavirus pandemic.

The rise of the oilseed above 600 dollars per ton in the Chicago market would translate into a greater and genuine inflow of foreign exchange for the country, also improving the prospects for tax collection.

It is now rumored that the Governor of Buenos Aires Axel Kicillof, a former Economy Minister under former President Cristina Fernández de Kirchner, who -by the way- is running the country now as Vice President while Alberto Fernández is on his European tour, is in favor of a 5% increase in tax exports (already at 33%).

Faced with the rise, the prospects of the Stock Exchange on the inflow of foreign currency, only for exports of the agro-industrial complex, are of more than 33,6 billion US dollars during this year and at least 8,5 billion in tax collection, according to the state news agency Télam.

The Rosario Stock Exchange (BCR) which is paramount to grains trade, reported Wednesday that ”soy was the most resonant crop (in recent days), reaching a maximum since 2012“.

It added that ”the state collection via export taxes for the 2020/21 campaign would reach a total of 8,600 million dollars, about 2,600 million dollars more than in the previous cycle, and the highest amount since the (campaign) of the years 2011 and 2012.”

Gustavo Idígoras, Chairman of the Chamber of the Oil Industry and the Cereal Exporters Center (Ciara-CEC), explained that high international prices could be maintained throughout 2021 due to a lower supply of grains worldwide.

“If the State takes advantage of this tailwind to improve the fiscal result, it would be good because the problem today is that the fiscal deficit is monetary emission. Anything that helps you reduce the emission is good,” Economist Camilo Tiscornia explained and insisted that the rise in international prices has nothing to do with domestic inflation and pointed at other countries in the region where prices for local consumers in no way reflected those steep increases abroad.

But Argentina's Minister of Production and Development Matías Kulfas did not agree: “The rise in international prices has had an impact on domestic prices,” said Kulfas.

The increase in international prices of commodities, especially those exported by Argentina, such as soybeans, corn, and wheat, gives a break to the Argentine economy, which receives an extra injection of dollars, but whether that is good news time will tell.