(Photo: Minister of Treasury, Hernán Lacunza, denied that the Government goes to update the export tax rates)

Buenos Aires, September 23rd. There is a certain psychosis in the agribusiness local activity. After the primaries, nobody knows exactly what will happen with the economy and particularly into respect to the ag-policy. As we said many times, in September 2018 the Government decided to re-impose export taxes, fixing an AR$4 per dollar to raw materials and AR$3 per dollar to manufactured products, except for the soybean complex that also tributes AR$4 per dollar.

At that moment, the exchange rate rounded AR$40 per dollar, wherewith the duty represented 10% of the dollar. But after primaries (August 11th), the dollar jumped to AR$60, but the duty remains at AR$4 per dollar or 6.6 percent.

Both farmers and companies estimate that the Government or the next Government will update the duty, perhaps to the equivalent in a percentage mode, that would imply AR$6 per dollar or 10% of the dollar price.

Last week there were strong rumors in the sense that the Macri’s Administration would update the export taxes value. There was a meeting between grain trading companies and Treasury minister Hernán Lacunza, at a moment when the export register was closed.

When the meeting was over, spokespersons bring calm to the market, saying that the parts only talked about the rhythm of the exports and the dollar liquidation, but nothing about an increase in the export taxes.

In the interim, exporters registered high volumes of operations, particularly in the corn market. In just a week, from Monday 16 to Friday 20, 2.5 million metric tons of the cereal were authorized for export. Cargill led the ranking with 570,000 tons, followed by local Aceitera General Deheza (AGD) with 500,000 tons. The Chinese company Cofco registered 400,000 tons, while Oleaginosas Moreno (owned by Glencore) registered another 211,000 tons and the local Vicentin registered 255,000 tons.

Instead of this, Archer Daniels Midland only registered 150,000 tons and Bunge, 100,000 tons.

Sources in the grain markets think that if Peronist Party takes office after December 10th, an update in the export taxes will be inevitable. But they don’t know if that adjustment will relapse on the soybean complex or both in cereals and oilseeds.

The RIA Consultores report suggests that the exchange rate when Alberto Fernandez (the presidential candidate) takes office will be the key factor to determine the magnitude of the export taxes update. If the Peso depreciation accelerates after October 27th (when the presidential poll will run) it’s logic that the export tax update is larger. In this case, it is possible that a major rate is imposed on cereals, due to the value of the cereals in pesos affect the domestic food industry. In the opposite sense, if the dollar remains stable, the correction will be smaller.