Ag Markets Mixed Awaiting Today’s USDA Reports

Argentine Ag Export Concerns

• Argentina’s president has again threatened to raise taxes or impose quotas on the ag sector to curb food inflation.
• In an attempt to avert further measures, the oilseed crushers association has agreed to a pricing deal to hold down domestic edible oil prices.
• The trade is awaiting details of agreement on sunflower oil and sunflower-soy oil mix and whether it will be enough to ease government concerns.
• Currently, wheat and corn exports are taxed at 12%, while soybean shipments are taxed at 33% and soy products at 31%.
• There are no export quotas for crops or meat at present after the government walked back a suspension of corn exports in early January.
• The government announced the president will meet with farm leaders in the capital on Wednesday.

FBN’s Take On What It Means: Argentina’s attempts to address price increases with export taxes and/or quotas in the past have hurt production and exports. The government has committed to avoid distortion in the export market, but concern it could raise export taxes remains following the president’s recent comments. A disruption to the country’s bean or meal exports could push more business to the US and further tighten stocks here.

Russia Confirms Floating Export Tax

• Russia approved its formula-based export tax for wheat, corn, and barley.
• The new tax is set to start June 2, one month earlier than previously planned.
• The formula for wheat is set at 70% * (FOB price-$200) per tonne.
• For corn and barley, the formula is set at 70% * (FOB price-$185) per tonne.
• All three commodities still have fixed export tariffs set to start February 15.
• Rising food prices and inflation continue to be issues the country is facing and the government has accelerated plans to halt the rise of prices.
• Measures so far have had limited impact.

FBN’s Take On What It Means: The tax is not a surprise but we anticipate it may not be the last string that Russia pulls to limit upside in its domestic grain prices.

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