Jan 12, 2021

Argentina Revokes Corn Export Restrictions

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

The pushback form the Argentine's government decision to temporarily suspend corn export registrations until the end of February was swift and complete. There was nearly universal agreement that there are ample supplies of corn within the country and that the suspension of corn exports would not have an impact on food prices, which was the rational given by the government for the suspension. Farmers in Argentina are planning a 72-hour commercial strike early this week to protest the suspension,

The pushback worked and the Argentine government announced early Monday morning that the suspension of corn export registrations had been revoked and replaced with a temporary 30,000 ton daily cap on corn export sales. The Ministry of Agriculture stated that the new measure should guarantee adequate supplies of corn for the domestic livestock market.

The new policy was a stark rebuke to the Argentine Minister of Public Works who responded last week when asked if the government would reconsider the corn export suspension by saying "For one time these sectors of the economy need to think about the rest of Argentines. A good part of these sectors that are going very well need to think about the interest of the country. That is why the government took this action. What is clear is that the government will not move one centimeter."

All this begs the question - why did the government suddenly take such drastic action at this time when by all accounts, there is no critical shortage of corn and some of the earlier planted corn will be ready for harvest in a couple weeks. I don't have an answer to that question, but my guess is that the government may be worried that the 2020/21 Argentina corn crop may end up being smaller than anticipated. If that turns out to be the case, this temporary suspension may have been a "trial balloon" to judge the potential reaction to restrictions they may have to be put in place later on.

Market interference is Vice President Cristina Kirchner's "mode of operation." She and former president Nestor Kirchner did this many times in the past and it would be no surprise at all if they did it again. Therefore, I do not think we have heard the end of this story.