Argentina’s government is set to resume wheat exports next month, putting an end to a prohibition in place since last March, Hugo Pels, a director at commodities broker Granar SA in Buenos Aires, tells GTR.
Wheat prices rose to a record level in September as a drought in Australia emptied stockpiles worldwide. However, December wheat sold for just US$189 a tonne on the Buenos Aires commodities exchange due to government interference, versus US$327 on the Chicago Board of Trade on September 11. The Argentine government is also tampering with exports of corn and meat.
Argentina has blocked such exports in a bid to keep a lid on rising bread and flour prices. Inflation in Argentina is forecast to hit 10.3% in 2007 and 12.7% in 2008, halfway between 3.5% and 4.1% for Brazil and 21.6% and 25.7% for Venezuela, according to the International Monetary Fund.
The South American country is likely to produce 15mn tones of wheat in the next crop, which starts in October. Up to 10mn tonnes will be shipped to world markets.
“I don’t believe the government will miss the opportunity to collect export taxes on those 10mn surplus tonnes,” Pels comments. “Farmers have already sold four million tonnes [of wheat] in advance exports.”
Pels also expects taxes levied on exports to rise further. “Louis Dreyfus and Bunge may have to pay 20% more to export wheat as early as tomorrow,” he warns. A four-month-old ban on corn exports is also forecast to end within 40 days.