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Argentina's grain exports flow

06/19/2013 @ 3:15pm

Argentina's trade surplus bounced back in May as income from exports of the country's bumper crops began to flow in.

The trade surplus in May totaled $1.34 billion, down from $1.38 billion a year earlier, but up from $1.15 billion in April, the national statistics agency Indec reported Wednesday.

May's imports grew to $7.09 billion, compared to $6.04 billion a year earlier. Exports swelled to $8.43 billion, up from $7.42 billion.

While the country posted a positive trade balance in May, a sharp jump in fuel imports has trimmed the surplus considerably so far this year.

During the first five months of the year, the trade surplus reached $3.80 billion, down from $5.74 billion during the same period in 2012.

During the same period, oil and gas imports swelled nearly 30% on the year to $4.56 billion. That was offset by a 20% jump in farm exports, which totaled $9.26 billion.

Near record crops this season in Argentina, a leading global soybean and corn exporter, have helped to maintain a positive trade balance despite the spiraling fuel imports.

However, Argentina has struggled in the face of surging demand and declining oil and gas production at home after companies shied away from investment to increase output due to price controls over the past decade.

President Cristina Kirchner used the production shortfall last year to justify seizing a controlling stake in Argentina's No. 1 oil and gas producer YPF SA (YPF, YPFD.BA) from Spain's Repsol SA (REPYY, REP.MC) and has tasked the company with reversing years of declining production that turned Argentina into a net energy importer.

The heavy fuel bill will make it a challenge for the government to meet its target of a $13.3 billion surplus outlined in the 2013 budget.

The trade surplus is the biggest contributor to Argentina's international reserves given low levels of foreign investment and offshore borrowing by the government and local companies.

The government has also imposed draconian barriers to stem the flow of imports. Those barriers have been steadily stepped up since late 2011 to help domestic industry and to trim the import bill.

Argentina's trade partners have complained bitterly about the protectionism.

The U.S., European Union, Japan and other countries have filed complaints at the World Trade Organization against Argentina's trade policies.

In a tit-for-tat response, Argentina has filed WTO complaints against the U.S. for barriers to beef and lemon imports from Argentina and against the EU for barriers to Argentine biodiesel imports.

--Alberto Messer contributed to this article.

Write to Shane Romig at shane.romig@dowjones.com

(END) Dow Jones Newswires

June 19, 2013 16:08 ET (20:08 GMT)

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