Death comes to us all. Life's but a walking shadow | So based on Cordonier's article on the Argentin economic situation let's see if I understand it. Producers there don't want to export beans because they pay a 35% export tax but Argentin has a very extensive crushing industry (Argentina is no. 3 soy meal exporter, Grain TV, yesterday). Do they pay export tax on meal and oil?
Meanwhile, Argentina is in the middle of a currency crisis and will be force to devalue. If the producers sell for export now they will get paid in dollars which convert to pesos at the official rate. When the devaluation occurs in the near future those pesos will be worth much less in dollars with which they need to purchase imports (fertilizer, machinery, etc). So the producers won't even sell enough beans to the local crushers to keep their own plants operating.
So if they lose 35% to taxes and what? 30% to devaluation that leaves them what? broke. And you think grain marketing is tough here!
Meanwhile a bumper Brazilian soybean harvest is just beginning next door.
By the way, the government miss-manages the economy and forces a devaluation, then claims the extra devalued pesos are a windfall and tax it. Now they again miss-manage the economy and the producers fully expect the government to increase the export tax.
Almost makes you appreciate the US government.
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