Argentina Increases Export Tariffs on Corn and Soybeans
Argentina's new left-wing government ramped up export taxes on grains and soybeans and their derivatives on Saturday in a widely anticipated move.
The new law establishes a 12% duty for corn, wheat, sorghum, sunseeds and barley.
The export tariff on soybeans, soybean meal and soybean oil is increased to 30%.
Argentina is the largest exporter of soybean meal and soybean oil.
Argentina is the third largest exporter of corn.
Before the Argentina elections, producers accelerated sales of corn and other agricultural commodities as the market has been anticipating a hike in export tariffs by the new government.
FBN’s Take On What It Means: We believe that the rise in Argentina’s export taxes can be a positive for the US corn and soybean derivatives export programs. We believe that the new tariff structure has the ability to reduce Argentina export volume which can shift some of the business to the US. If the US corn and soybean derivative exports increase, this can draw down stocks and support futures and cash prices.
U.S. and China Sign Phase 1 Trade Deal
As of Friday, Dec. 13th, the U.S. and China agreed to sign a limited Phase-1 trade deal to help end the long-running trade battle between the two nations.
As part of the agreement, China would guarantee purchases of large quantities of American merchandise, especially soybeans, poultry and other farm products.
The current figure of committed agricultural purchases is $50 billion.
As part of the agreement, $32 billion of purchases will come during the first two years with increases coming over subsequent years.
FBN’s Take On What It Means: We believe that both the US and China agreeing to move forward with the limited Phase 1 trade agreement is a bright spot for the US farmer. At FBN, we believe that “the devil is in the details,” and at the moment neither China or the US have provided specifics as they pertain to US agriculture. No details have been provided for agricultural commodities, volumes or times.
The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)
