Jan 04, 2021

Argentina Suspends Corn Exports Until at Least March

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The suspension of Argentina's corn export registrations until March 1st, which was announced last week by Argentina's Agricultural Minister, came as a surprise to the market, but in reality, this is history repeating itself. The stated rational for the decision was to insure an adequate supply of corn for the livestock industry for the production of poultry, eggs, pork, milk, and beef.

The current Vice President is the former President Cristina Kirchner. When her husband Nestor Kirchner was President from 2003 to 2007, they did the exact same thing with corn. They suspended corn exports in order to hold down food inflation because corn represents a significant component livestock feed.

Without the export market, the domestic price of corn declined, which was exactly their goal. Farmers got the message, and as a result, farmers in Argentina moved away from corn production because they did not know what the future price of corn would be due to the possibility of the government interfering in the market. Without the export market, they could not look to the Chicago Board of Trade for guidance on future corn prices.

As a result, for many years, farmers in Argentina planted about 6 times more hectares of soybeans than corn. It is now down to about 2.7 times more hectares of soybeans than corn because when President Maurico Macri took office in 2015, he vowed not to interfere in the markets and farmers started to increase their corn acreage. They knew that it was better to have a corn-soybean rotation than a monocrop of soybeans year after year.

This announcement is bringing back bad memories from the prior Kirchner administrations when in addition to interfering in the market, they also were responsible for starting Argentina's export taxes on agricultural commodities.

Up until now, Argentina has exported 34.2 million tons of corn from the 2019/20 crop out of an expected 38.5 million tons of exports. The objective of the government's action is to keep the remaining 4.3 million tons of potential exports within the country to insure an adequate corn supply for livestock producers.

If the weather in Argentina remains problematic and corn production estimates move lower, it would not be a surprise if the administration takes further steps to restrict potential corn exports.