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South America update

Mike McGinnis chats with Luís Henrique Vieira.

-I'm Mike McGinnis with Agriculture.com. We are visiting via Skype today with Luís Vieira. He is an independent agricultural reporter from the southern part of Brazil in the state of Rio Grande do Sul and we have joined Luís before on Skype. Luís, hello, and how are things in your area? -The weather is pretty cool here, but there are no implications for the agricultural sector as yet. -Okay. I know you're having some cooler temperatures overnight, but we wanna talk about a couple of things here. First off, the U.S. soybean prices are up over 40 cents today, partly because of the strike in Argentina and the soybean market feels like this week-long strike could slow some shipments or some exports of soybeans on the world market. What are you hearing? It's interesting to note for our viewers that you just returned from Argentina. What did you find out? -Yeah, I found out there that there's a lot of pressure to the farmers there. They have a lot of taxes. First, they have the soybean tax. From all sales of soybeans, they have a 35% tax. But now, in the province of Buenos Aires, the most populated area, they just approved a new property tax. The rates, they range according to the side of the farmers' properties. So, the strike came from this. A lot of farmers from all parts-- all parts of the country are afraid of similar regulations in other provinces. -Okay, so this strike is only affecting the province of Buenos Aires, but all Argentinian farmers have joined the strike because they're concerned that this tax issue may spread throughout the whole country. -Yeah. -Tell us exactly, Luís, what will they be doing, how will they strike, and what kind of an impact it will have on soybean shipments. -They are-- Yeah, they are not shipping any grain. They are not shipping any grain to the cities, and also, they are not making any sale of grains to the cities. So, therefore, 80% of the grain production is not going to the supermarket and different kind of establishments, but this will last about a week. But the big fear of the farmers is that many provinces have the same problem of the province of Buenos Aires. The province of Buenos Aires has a budget problem. So, in order to balance the budget, they're raising the taxes on farmers. In that case, I would include in this possibility the province of Santa Fe and Cordoba. They also grow a lot of soybeans there and they have deficits in their budget. -Okay, deficits in the budget. Okay. I wanna move on to what the crop sizes look like. We all know that there was a drought in Argentina and in Southern Brazil. -Yeah. -Again, for those just tuning in, possibly, we wanna remind folks we're visiting with Luís Vieira. He is an Argentinian reporter, our Brazilian reporter that just returned from Argentina, and living in the southern state of Rio Grande do Sul. Now, we're getting new crop estimates today, Luís, from Informa. It's a private analyst firm. They lowered the Argentinian soybean crop down to 40 million metric tons and they're also saying that Brazil soybean crop for next year will be 60 million metric tons which is much lower than what they produced this year because of the drought. The question I have for you is, in Brazil, are there still concerns of a soybean shortage this summer? -Yes. The problem is to supply still the [unk] industry, but the Argentinians are still able to supply our production. Because even though they have their drought, they are still able to supply their market and export the remaining part. -Okay. So, there still are enough soybeans in Brazil to carry it through the season. Is this-- that what you're saying. -Yeah, yeah. -And we're also hearing that Brazilian farmers are expected to plant a record soybean crop for next year. Is that correct? -Yeah, they are increasing the prospect of soybeans and corn. The corn is being even more profitable. There is an estimated increase of 22% in the production of this year, even though the second season didn't start it yet. So, I think the prospect is really good for corn and soybeans in Brazil. -Okay, very good. Well, Luís, thanks for your time. We appreciate it. -Okay, thank you so much. -Okay, Luís Vieira, he is a reporter in Southern Brazil in the state of Rio Grande do Sul. I'm Mike McGinnis for Agriculture.com.