‘Soy dollar’, lowered taxes to bolster Argentine soymeal, soyoil exports

28 Nov 2022 | Eduardo Tinti

Argentine farmers are not expected to sell as much soybeans as they did in September despite the reinstitution of the preferential exchange rate policy colloquially known as the “soy dollar,” while Argentine soyoil and soymeal are expected to gain export competitiveness, market sources have told Agricensus Monday.

Argentina’s government confirmed late Friday that it would introduce a new soy dollar scheme from Monday to the end of the year, while also going on to  reduce the export duty on soyoil and soymeal from 33% to 31% - a measure that was expected only a month later.

“We can expect another round of good farmers’ selling of soybeans but not at the pace of what we have seen in September during the first soy dollar period,” Anilkumar Bagani, research head at Mumbai-based vegetable oil broker Sunvin Group, told Agricensus.

At the same time, market participants believe the combined effect of bolstered soybean farmers sales and the reduction in export taxes on soyoil and soymeal will likely benefit Argentina’s oil and meal exports.

“The most important thing of the measures announced is the reintroduction of different export tariffs in favour of subproducts,” head of the Latin America grains sales desk at HedgePoint Global, Maria Sol Arcidiácono, told Agricensus.

Arcidácono does not expect Argentine soybeans to be extremely competitive at the export market at this time of the year but believes the measures announced Friday will pressure global soymeal prices and the regional basis of both soymeal and soyoil lower.

A trader heard by Agricensus Monday has similar expectations saying they believe meal and oil prices will drop significantly over the coming couple of weeks.

Bagani agrees that Argentine meal and oil exports will likely benefit from the measures, expecting to see a pickup in exported volumes.

“The export registrations for meal and oil should… [benefit from] competitive prices and reduced taxes,” he said.

The policies announced on Friday are regarded as positive both for farmers and crushers, but most believe farmers’ sales will not be as aggressive as in September.

Argentine farmers sold a total of 13 million mt of beans under the previous soy dollar scheme in September and hold now about 12 million mt of yet-unsold old crop soybeans.

The somewhat limited volume of beans farmers still have at hands is not the only reason why market participants do not expect the pace of fresh sales up to the end of the year to be as robust as in September.

“Farmers are still unsure about the current weather conditions which has delayed the 2022/23 soybean sowing and unless weather conditions turn favourable, farmers’ selling of beans would be a touch slower,” Bagani said.