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U.S. to Lose Soybean Marketshare to Argentina, Analyst Says

Buenos Aires, ARGENTINA  (Agriculture.com)-- As the new president of Argentina, Maurício Macri confirms today the end of the export tax for wheat, corn, beef, and sunflowers, added to a reduction of five percentage points per year for soybeans, analysts have diverged about a forecast of the U.S. Department of Agriculture that just increases the South American country's soybean exports by 500,000 tons during the 2014/15 crop season. Most experts say that the U.S. agency has underestimated significantly the real potential of Argentina shipments this year. That is the case, says Natália Orlovicin of INTL FCStone in Brazil.

"With a possible improvement of soybean prices, I believe that the exports could grow from 10% to 15% compared with last year [an increase of 1 to 1.5 million metric tons," Orlovicin opined in an interview with Brazilian magazine Globo Rural. While the value of beans fell 3.9% in Chicago at the week's close, at the location of Rosario, the main grain port of Argentina, the week closed with a 15.4% jump of the grain's value to US$ 307.36 per ton.

Prior to the skyrocket of the soybean export taxes, Argentina had seen a jump of soybean exports from 7.1 million metric tons in 2005/2006 to 12.1 million metric tons. In 2008/2009, that same number plummeted to 3.4 million metric tons but recovered to 13.3 million metric tons in 2009/2010 and then dropped again to 6 million tons in 2011/2012, according to the Rosario Board of Trade. The reason for the ups and down was the storing of grains as a way to speculate with the currency's value, that mostly was delayed and had seen a continuous devaluation in the period, and to protest against the government policies by not generating foreign reserves.

As those policies will change gradually, cereal and grain exporters announced last week that they will collaborate with the new government by anticipating some of the dollars that the country's Central Bank needs. The exporters will generate at least $10 billion in the next three months through grain sales.

"I believe that this [the USDA] estimate is short, and we can see new bullish measures in the future. The data of this agency indicates that in the 2014/2015 marketing year, Argentina will export 11.6 million tons. Our estimate is around 12.5 million metric tons. This is due to the fact that we already shipped 12.2 million tons in the commercial season, and yet there is some cargo programmed," analyzes Guillermo Rossi, director of information and economic studies at the Rosario Board of Trade, in an interview with Agriculture.com.

Asked which country would be more affected, Rossi said that the U.S. is more likely to lose some of the market than Brazil. "It is hard to tell because the world trade is rising. Surely, we will not steal market from Brazil because its trade has been aggressive. The U.S. has lost some of the market and its exports are delayed, but the market can be recovered between December and February, when the South American stock is reduced," tells Rossi.

Gustavo López, a senior analyst from Buenos Aires and director of Agritrend, pointed out, on the other hand, that the planting of the new crop is a key issue. "The remaining stocks of the cycle are also important. I think there will be more crushing and perhaps crushing will overcome 44,000 tons, which is mostly exported," affirms López to Agriculture.com.

Regarding the mid-term, Raul Padilla, CEO of Bunge Brasil, said in an event in São Paulo that Argentina will be a very big challenger to its competitors. "Argentina is really back in the game in the world's markets of agricultural products. The currency value will be hard to forecast and will affect the trade [of grains]," Padilla analyzed.

Argentina's soybean grain exports in metric tons

2005/06 - 7.1

2006/07 - 12.1

2007/08 - 11.5

2008/09 - 3.4

2009/10 - 13.3

2010/11 - 10.3

2011/12 - 6.0

2012/13 - 8.2

2013/14 - 7.7

2014/15 (forecast) - 12.5

Source: Rosario Board of Trade

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