(Photo: The Fernandez’ concern: selling their grains in advance, farmers are emptying the fiscal coffers of the next government)

Buenos Aires, November 29, 2019. Politics move the grain market like it is a fundamental, related to the demand trendings. During November, grain sales of the coming harvest 2019/2020 accelerated due to the intense rumors about an increase in the export taxes when the new government takes office, i. e., since December 10.

An article in the economic newspaper El Cronista ignited the alarm when journalist Paula Lopez wrote based on unidentified sources that the soybean export tax would climb to 35%, the wheat one to 20% and the corn one to 15 percent.

This single mention shot up a grain sale fever in the domestic market. Exporters registered during November 15.2 million metric tons of grains and byproducts, a volume that heavily contrasts with 2.3 MMT in November 2018, 5.5 in November 2017 and 3.5 MMT in November 2016.

This movement is in the opposite direction with what occurred in November 2015. At that month, assuming that the presidential candidate Mauricio Macri would defeat the Peronist one Daniel Scioli, farmers stopped sales, waiting for the elimination of the export taxes, a promise made by Macri during the campaign.

In that November, registration of grain and byproduct exports slumped to 1.9 MMT. Two months later, when the order of removing the export taxes (except for the soybean complex) came into force, farmers sold 18.5 MMT of grains, a figure that it was surpassed only in August 2019.

The aim is to freeze the current level of export taxes, which are around 6% for cereals and 24% for soybean.

But the huge volume of sales has had collateral effects over the farmers. Future prices in the local market dropped 2 to 3% due to this.

But perhaps the main problem is received by the next government. First, the volume of the coming campaign will not so high as the last one. It is expected it will be 10 MMT lower than the 2018/19, when farmers collected 147 MMT. Second, around 33 MMT is already sold with the current export tax scheme. Assuming that around the other 30 MMT are commercialized in the domestic market and thus it does not pay export taxes, if the elected president increases the taxes, it will have an effect just in the remaining 77 million metric tons of grains for export.