‘Soy dollar’ and lower taxes to bolster Argentine soy meal and soy oil exports

Government confirms a new soy dollar scheme from Monday, November 28

Argentine farmers are not expected to sell as much soybeans as they did in September, despite the reinstitution of the preferential exchange rate policy known as the “soy dollar”. Meanwhile, Argentine soy oil and soy meal are expected to gain export competitiveness, market sources have told Fastmarkets Agriculture.

Argentina’s government confirmed last Friday that it would introduce a new soy dollar scheme from Monday, November 28, to the end of the year while also reducing the export duty on soy oil and soy meal 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 us.

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

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

The scheme’s effect on prices

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 soy meal prices and the regional basis of both soy meal and soy oil lower.

A trader heard by Fastmarkets on Monday has similar expectations and says they believe meal and oil prices will drop significantly over the next 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 positive for both farmers and crushers, but most believe farmers’ sales will not be as aggressive as in September.

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

The somewhat limited volume of beans farmers still have at hand 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 favorable, farmers’ selling of beans would be a touch slower,” Bagani said.

View our data analysis on soybean crush volumes and margins.

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