Exclusive: Argentina soy crushing dented by FX woes and taxes, export chamber says - Metro US

Exclusive: Argentina soy crushing dented by FX woes and taxes, export chamber says

FILE PHOTO: A truck unloads soy grains in a silo bag on a farmland in Chivilcoy, on the outskirts of Buenos Aires

BUENOS AIRES (Reuters) – Argentina’s soy crushing volume is set to drop around 9.5% this year, the head of the CIARA-CEC grains exporting chamber told Reuters on Tuesday, important for both the global soy market and the country’s inflow of much-needed hard currency.

The country, the world’s top exporter of processed soy meal and soy oil, had been impacted by “a high tax burden, the lower flow of grains and the volatility in the foreign exchange market,” Gustavo Idígoras said in a telephone interview.

Idigoras said that the country’s famed crushing plants, which dot the Parana River, would crush around 38 million tonnes of soy, versus what he said was 42 million tonnes in 2019. He said idle capacity currently was at 50%.

“The lower profitability makes it hard to improve the prices paid to producers,” Idígoras said, adding there was less grain flowing from the farms to the processing plants.

Argentina, in recession since 2018 and grappling with a dangerously low level of foreign currency reserves, needs a strong inflow of dollars from exporting sectors, where grains from the country’s fertile grasslands dominate.

The center-left Peronist government has been tightening currency controls imposed since last year, limiting access to dollars, and has previously hiked taxes on farm products.

Argentina’s soy crushing volume has been declining so far this year, including a steep 20% drop in August.

Last year Argentina exported $12.25 billion worth of soymeal and soyoil, government data show. The Rosario grains exchange estimates the country will produce 50 million tonnes of soybeans this season, with planting starting next month.

The country harvested 49 million tonnes of soybeans in the 2019/20 campaign, which ended in July, down from 55.3 million collected in the previous season, official data show.

(Reporting by Maximilian Heath; Editing by Adam Jourdan and Marguerita Choy)

More from our Sister Sites