Argentine tax rebate likely to increase soybean planting

Argentina's soybean growers could plant more of the crop for this season than previously estimated, encouraged by a tax rebate announced earlier this month as President Mauricio Macri maneuvers to bolster support in an opposition stronghold.

The rebate in 2017 of 5 percent on exports across 10 northern provinces will propel a shift by some farmers to soybeans during planting in December, said Esteban J. Copati and Ramiro Costa, analysts at the Buenos Aires Grain Exchange.

The exchange had seen some farmers switching to wheat and corn for the 2016-17 season, after Macri swiftly scrapped export taxes on those crops last year. It also saw a decline in the area planted with soy. But that picture has changed, according to Copati, the head of estimates at the grain exchange.

"It's likely there'll be an expansion of soy in the northern provinces," he said.

The shifting outlook points to the interplay between Argentine politics and soybean production in the third-largest grower of the crop. Any change in output will be watched closely by traders and rival producers worldwide as the soybean market is already oversupplied.

Macri, who took office in December, reneged earlier this month on a campaign pledge to reduce the tax on soybean exports from 30 percent now to 25 percent in 2017. That disappointed farmers who had looked to lower tariffs as a way to boost shipments to foreign buyers.

Macri mitigated the bad news by unveiling the rebate for the northern provinces, which produce less than 10 percent of Argentina's soy. They needed the tax benefit more than farmers in the country's Pampas farther south because they're far from export ports, said Sergio Berensztein, a political analyst in Buenos Aires.

Based on the most recent estimate from the Buenos Aires exchange, made earlier this month, the area in Argentina planted with soybeans is predicted to decline from 49.7 million acres in 2015-16 to 48.4 million acres in the 2016-17 crop year.

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