Milei’s 48-hour tariff pause spurs record surge in crop exports

President Javier Milei’s brief pause on crop export tariffs last week, implemented to shore up the nation’s finances, sparked the biggest wave of bookings on record. Commodity traders and farmers are now grappling with the fall-out.

Milei’s gambit to boost the supply of dollars on the foreign-exchange market quickly attracted about US$7 billion in scheduled shipments as exporters — including commodity trading houses Bunge Global SA, Cargill Inc and Louis Dreyfus Co — seized the moment.

Within 48 hours, the tariffs were back in force, including levies of about 25 percent on soy shipments and around 10 percent on corn and wheat.

While it was hardly the first time swings in government policy have triggered a mad dash to export, the scale of last week’s trading frenzy has left the country’s agricultural sector reeling. Almost 20 million metric tons of oilseed and grain shipments were booked, easily the most in Agriculture Department data going back to 2011, a Bloomberg News analysis shows.

“I’ve never seen anything like it,” said Gustavo Passerini, a veteran grain markets consultant in Rosario, Argentina’s trading hub on the Paraná River. The only other time in recent history that might compare was when the country hiked export tariffs in 2007, he said.

The export rush isn’t just raising eyebrows in Argentina. US soy farmers are currently shut out of the Chinese market, to the benefit of Argentine and Brazilian producers, with all eyes turning to Donald Trump’s coming talks with Xi Jinping on the issue.

But farmers up and down the Argentine Pampas are also frustrated, suspecting traders might capture most of the price gains.

“We’re hot under the collar because the government let the exporters benefit,” said Santiago Fernandez de Maussion, a farmer in Jesús María, Córdoba Province. “Now they get to negotiate prices with the upper hand, while I’m struggling to even turn a profit.”

Traders may also be in a bind. They have pledged 12.4 million tons of soy cargoes between now and March, before the next harvest rolls in. And yet it’s late in the year, a time when inventories on the Pampas are diminished and growers have more bargaining power.

“The special programme triggered a whirlwind of crop sales,” CIARA-CEC, Argentina’s chief exporting and crushing group that includes all the major trading houses as members, said in a post on X. “Trading companies continue operating in grain markets to meet all export contracts as is customary.”

As of September 24, growers had sold more than 35 million tons, or 62 percent of total estimated supplies of 57 million.

“The farmers with beans left are the ones with the financial clout to hold them back in silos, so they have leverage,” said Javier Preciado Patiño, a consultant who served as Argentina’s head of agriculture markets from 2019 to 2022.

They’re already gaining in the tug of war. Offers for soybeans hover around US$350 a ton, compared to less than US$300 before tariff relief, according to the Rosario Board of Trade. That means traders are passing along roughly 60 percent of the benefit as they scramble to cover commitments, according to market analyst Lorena D’Angelo.

Milei himself pointed to the higher prices in a September 30 television interview as proof that farmers are reaping a share of the windfall.

Still, growers – a bastion of support for the libertarian president – remain upset that the scales were tilted toward traders. It compounds frustration that Milei hasn’t fulfilled a promise to unleash agriculture. Farming is a pillar of Argentina’s economy, yet production has been hampered for two decades by government interventions and is falling further behind neighbouring Brazil.

“We take the most risk, and yet we shoulder the burden again,” said Augusto Mc Carthy, a farmer in Navarro, Buenos Aires Province. “The exporters shouldn’t be keeping any of what is rightfully ours.”