Argentina has decided to temporarily open its doors to soybean imports in a move widely seen as an attempt to pressure farmers into selling stocks.
All crushers are now allowed to import beans from Paraguay and Bolivia, free of tariffs, for processing into meal, oil and biodiesel, ending a regime of selective imports in place since 2012.
The crushing industry welcomed the move, pointing out the Argentina’s massive crushing industry is currently working at only 65% of capacity.
It is the latest measure in new Argentine President Mauricio Macri’s push to clear away the controls that have restricted the local soy sector over the last eight years.
In December, the new president struck down export tariffs on corn and wheat and lowered the soybean export tax by five points to 30%. Meanwhile, he devaluated the Argentine peso by 40%. These measures gave local farmers and the industry a real competitive boost.
But these measures did not prompt farmers to unload all of their massive soybean stocks, which they had built up over the last couple of years as protection against economic instability and in anticipation of a devaluation of the peso.
Instead, many are being cautious, holding back the lion’s share of stocks in anticipation of higher prices later in the year. With two months left of the 2015-16 commercial year (May-April), farmers have as much as 12 million metric tons (mmt) in silo bags on the farm.
However, allowing imports will not likely lead to a massive influx of soybeans from Paraguay, which has limited stocks this late in the season. But, it is clearly a message to farmers.
The government needs the dollar revenues that the export of Argentine soybeans, meal and oil would generate.
Argentina is the world’s No. 1 exporter of soymeal and soyoil, produced at the massive crushing plants in and around Rosario port.
Soybean production in Paraguay has been steadily growing in recent years. It will harvest around 9 mmt of beans in 2015-16, consolidating its position as the world’s No. 5 producer.
Up until around 2009, a lot of Paraguayan beans went to Rosario for crushing, but when Argentina closed its doors, multinationals started installing capacity in the land-locked country.