Agriculture traders in Argentina are rushing to get crop shipments on the books before President Javier Milei’s tariff relief expires next week.
Trading houses, which must procure licences for their future cargoes by listing them on a government register, are notching the biggest volumes of soy and corn since Milei temporarily reduced export tariffs at the beginning of the year.
The move was in part designed to help farmers struggling to turn a profit amid low global prices, and in part to bring forward inflows of dollars to the central bank as Milei seeks to stabilise the economy ahead of midterm elections in October.
Milei slashed tariffs on exports of soy meal and soy oil to 24.5 percent from 31 percent until June 30. Argentina is the world’s biggest supplier of both commodities. For corn, the rate is currently 9.5 percent and is set to return to 12 percent.
Under the tariff-relief guidelines, exporters must bring nearly all the dollars that cargoes are worth into Argentina almost as soon as they’re listed on the register – even though many won’t be loaded at port for several weeks. Normally, they can do that after cargoes have sailed.
As Monday’s deadline approaches, the export register known as DJVE is seeing a flurry of activity. Traders including Bunge Global SA, Cargill Inc and Louis Dreyfus Co. BV were granted soy and corn licences on Thursday alone for more than 2.5 million metric tons, the most daily since relief started January 27.
June has seen the most crop cargoes listed on the register of any month since December 2023, when Milei came to power and devalued the currency in a boost for exporters, according to Javier Preciado Patiño, a farming consultant who served as Argentina’s head of agriculture markets from 2019 to 2022.
Of course, exporters need supplies to fulfil the shipments. Farmers who are finishing up the soy harvest locked in sales of their crop at the quickest clip yet this season on June 24 and 25, data from the Rosario Board of Trade show.
The years-long export tariffs are loathed by farmers since they eat into their ability to reinvest and grow production. Agriculture groups have been lobbying for the relief to be extended.
Milei campaigned on a vow to scrap the tariffs, but his priority is building budget surpluses and since they rake in billions of dollars a year he can’t afford to.
Ariel Striglio, a farmer in Santa Fe Province, sold only slightly more of his harvest than normal over the last few weeks in a bet that Milei will resume relief. “At some point, the government is going to have to do what it said it would,” he said. “I hope the rates will stay as they are and even go down more next year.”
by Jonathan Gilbert & Ignacio Olivera Doll, Bloomberg
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