Campo: after the reduction in withholdings, the market expects the elimination of the Blend dollar as the next step

During the Minister of Economy Luis Caputo announced a reduction of withholding taxes on exports in the agricultural sector for key crops, such as soybeans, wheat and sunflower. The market welcomes the decision, but raises questions about the elimination of the “Blend dollar” and about whether the new price on the blackboard will be enough to prevent losses.

The Government announced a reduction in taxes on exports in agricultural sectors. This is a temporary reduction, since it will remain in force until June 30. In turn, for certain products such as sugar, cotton, tobacco and rice, they will be permanently eliminated.

According to Adcap Financial Groupthe fiscal impact will be -0.18% of GDP. For other consultancies, such as Outlierrepresents a -0.12% of GDP.

The measure is taken in a context that is not favorable for the sector. According to Outlier, moderate rains in the last quarter of 2024 revived fears of a possible drought for the 2024/25 harvest season.

Therefore, the Cereal Bags from Buenos Aires and Rosario they have reduced their estimates of soybean and corn production in approximately a 4% compared to previous projections.

However, it could be worse. These preliminary figures are likely to face further downward revisions; We currently anticipate a 10% decline compared to our December 2024 estimate”, estimates the consultant.

In turn, according to the analyzes of Adcap Grupo Financiero, the financial tension caused a reduction in soybean planting areas by approximately 200,000 hectaresas producers switch to alternative crops or suspend planting altogether.

Under this mantle of unpredictability for the field, and prior to the February 6 meeting agreed with the Liaison Table, The Government makes a decision that, in turn, coincides with the negotiations with the IMF. In this context, Outlier considers whether it is a first step path to the elimination of the Blend dollaran action requested by the organization from mid-2024 onwards, but allows the sector to obtain a better price for its liquidation.

On the other hand, it is worth asking What position will the producers take now that the Government opens the way to a negotiation with this measure?. The market assumes as the most optimistic estimate a linear transfer of the decrease to the local price charged by the producer around US$20 – US$26 per ton, in the case of soybeans. That translates into about US$80 per hectare, a figure similar to the approximate loss that was calculated in the core area for a leased field.

“Given that we have to see if the linear transfer occurs, how much external and local prices compensate if local supply is really managed to accelerate and take into account that the margins may continue to worsen, thus It cannot be assured that it will be enough to prevent losses.”, defines Outlier in its conclusion.

Finally, it is expected that costs in dollars will continue to rise throughout the year and the problem will spread. That’s what he said Gustavo Idigoraspresident of the Argentine Chamber of the Oil Industry and the Center of Cereal Exporters (CIARA-CEC), since the post to June 30 will be an issue that the Government must take up, when the withholdings return to their previous percentage.

“We will have to see how management acts in that sense, perhaps they decide to lower withholdings permanently but by a smaller percentage.“, hopes the agricultural exporter.