In a surprise move, the government said it’s temporarily suspending export licences for corn set to ship before March 1 to maintain adequate domestic animal-feed supply, adding to the outlook for tightening global supplies that’s pushed futures to a six-year high.
Argentina has already authorised export of 34.23 million metric tons of the grain for the 2019-2020 season out of an expected 38.5 million. It wants to ensure that the remaining 4.27 million tons are available for internal consumption during the summer months, when the supply of cereal tends to be scarce, the Agriculture, Livestock and Fisheries Ministry said Wednesday in a statement released on its website.
“This decision is based on the need to ensure the supply of grain for the sectors that use it as a raw material for the production of animal protein such as pork, chicken, eggs, milk and cattle, where corn represents a significant component of production costs,” the statement said.
“To date, 34.23 million tonnes of corn from the 2019/20 season has been authorised for export, out of a exportable total of 38.50 million tonnes,” the statement said.
“The objective of the measure is that the remaining 4.27 million tonnes remain available for domestic consumption, in order to ensure the supply during the summer months when the supply of cereal tends to be scarce,” it added.
The decision by Argentina, the world's third-largest corn exporter, comes amid a tight market that is driving higher prices. The corn futures in Chicago on Wednesday recorded its longest rally bullish outlook for Chinese demand and persistent supply concerns. Russia said earlier this month that it would introduce a grain export quota and tax on wheat amid rising food prices.
The Agriculture, Livestock and Fisheries Ministry said it will reopen the export licence registry "eventually and depending on how supply and demand evolve, as well as the prospects for the 2020/21 corn crop."
Farmers and agricultural firms generally oppose intervention into the markets.
“We are absolutely surprised. It does not make sense. There was never a lack of corn in Argentina,” Alberto Morelli, the head of the MAIZAR corn industry chamber, told Reuters in a statement.
The Confederaciones Rurales Argentinas (CRA) slammed the move, saying it had been made without consultation.
“We all understand that ceasing exports is a terrible measure,” the group said in a statement. “We all know that if we do not export, no foreign currency enters.”