After the United States has decided to impose duties on Argentinian biodiesel as anti-dumping measures, Argentina reacted changing its tax structure for biofuels. In August, the U.S. issued duties of 57% against the Argentinian product. In October, the rate was increased to 72.28%.
The Argentinian export tax structure had a lower rate for biodiesel than for soybean oil. In June, the export tax on biodiesel was zeroed, while the export tax for soybean oil was rated at 27%. These differences were interpreted by the U.S. government as an incentive for biodiesel and an unfair competition. Starting in January of 2018, the rate will be unified at 8%.
In 2014, Argentina exported 170,000 tons of biodiesel to the United States. The volume exported jumped to 1.5 million metric tons last year or US$ 1.2 billion. Argentinian authorities expect a new gesture from the U.S. government with the change.
Argentina’s annual biodiesel production is 2.2 million metric tons, being 1.1 million metric tons sold in the domestic market. The processing capacity installed in the country is 4.5 million metric tons.
The Monetary Policy Committee of the Brazilian Central Bank had its monthly meeting yesterday and decided to cut interest rates by 0.5 percentage points. The reference rates are now 7% a year and the lowest level in history.
The reduction was the tenth consecutive in the year, after a drastic reduction of inflation. Inflation target was 4% a year, but now the inflation rate is nearly 2.7%. Most analysts already expected the interest rates cut.
The Focus report, published by Brazil’s Central and that gathers estimates from private financial institutions, forecasts that interest rates would be cut in the country twice in a short period of time. The first cut would happen this Wednesday and the rate would 0.5 percentage point to 7%. The second cut would happen just in February of 2018, but the rate would only be cut by 0.25 percentage point.
The new is relevant for the grain market because it affects the competitiveness of Brazil’s Real and the growth of the Brazilian economy, that would be boosted in 2018. Inflation expected for 2017 is 3.06%, while the inflation target was 4.5%.
India has increased duties on imports of vegetable oils to its highest levels in a decade. The rate imposed by the Indian government hikes from 17.5% to 30%, while the duty refined soybean oil raised from 2o% to 35%. The new duties harm mostly Argentinian and Brazilian exports, which were nearly US$ 100 per ton more competitive than the locally-produced oil, but it will also hurt Malaysian and Indonesian exports.
A report from consultancy Trigo & Farinhas, based in Curitiba (Brazil), denies that Brazil would import Russian wheat after yesterday’s market speculation at the Chicago Mercantile Exchange. Luiz Pacheco, the consultancy’s director and editor of the reporter, said that there are three reasons that the South American country would not bring wheat from Russia.
The first one is that imports are made by private companies, not the government, and they already allowed to do it and never done before. Second is that Russian wheat does not have quality. “Russian wheat is 10%-12% of protein, but it does not grow for consumption of pizzas or cakes”, explained Pacheco.
Finally, the third reason is that the Russian wheat is not competitive against Argentinian wheat. A FOB price listed in a Russian port by Trigo & Farinhas was US$ 192 per ton this week, while Argentinian wheat is paid US$ 176 per ton with a costly freight cost from the Black Sea to Brazilian ports.
The United States government has decided to increase the duties paid to import Argentinian biodiesel from 54% to 70% this week. The Argentinian Chamber of Biodiesel (Carbio) considered this measure “unjustifiable” and “unsupported”. In addition, the Chamber stated that the U.S. industry will “monopolize the market”.
The sales of the 2017/2018 crop in Argentina are strong. According to Buenos Aires brokerage Zeni, there a growth of 62.2% on sales compared to the same period of last year. The volume of forward sales already reached three million metric tons. The reason behind the increase is that soybean will have a decrease of export tax by 0.5 percentage points per month in 2018, starting in January.
The government of Argentina has announced this Wednesday (09.20.2017) that imports of Brazilian beef are allowed. For five years, Argentina did not import beef from Brazil after a mad-cow disease outbreak registered in Londrina, state of Paraná.
Hog and poultry producers in the Brazilian state of Santa Catarina will be able to save up to 70 percent on corn purchases. The reason is that state will no longer bring the input from the state of Mato Grosso, but would import from Paraguay (310 miles or 500 km away) through the border of Santa Catarina with Argentina, which is closer and the logistics is cheaper. Santa Catarina demands 6.5 million metric tons annually, while it just produces nearly 3.5 million metric tons of corn.
The United States has requested Argentina to set a minimum biodiesel price after the North American country had imposed duties of up to 64.17 percent for the imports of Argentinian biodiesel. The government of Argentina seeks a quick solution for the problem and avoid new restrictions. For the National Biodiesel Guard, the group behind the denounce before the U.S. Commerce Department, Argentina does dumping by having different export taxes on biodiesel (0.13 percent), soybean oil (27 percent), and the soybean grain (30 percent), benefiting its biodiesel processing. A possibility indicated by unnamed sources is to have quotas for Argentina with lower duties.