Argentina: New president removes quotas on wheat and maize export

Argentina’s new President Mauricio Macri has removed quotas on the export of wheat and maize. This move will add further competition to the world’s grain export market, just a few weeks after export taxes were abolished for these grains, HGCA reported on December 30.

In their latest forecasts, the USDA lifted their forecast for Argentina’s wheat exports by 1 mln tonnes to 6 mln tonnes for 2015/16. The removal of the export quotas could have implications on the USDA’s trade forecasts in their next supply and demand update on 12 January.

The removal of the quotas means that there is now no limit on the amount of wheat and maize that can be shipped from the country. The former President had introduced the quotas (applied on a discretional basis) as a means to ensure domestic food needs. The impact of the use of quotas meant that Argentine farmers shifted from producing wheat and maize in favour of soya beans (which weren’t subject to quotas).

An immediate implication of the policy change could be a small shift from area planted to soya beans to area planted to maize for the late 2015/16 season, with planting of both crops underway at present. According to the Buenos Aires Grain Exchange, 82% of the planned soya bean area was planted at 23 Dec, compared with 69% of the maize area.

While the removal of the export quotas was anticipated by markets, this is likely to exert additional bearishness to an already pressured market.

06 January, 2016