Cut in soybean and wheat taxes in Argentina has limited impact in Brazil

Argentina announced a reduction in wheat export taxes from 7.5% to 5.5% from June, in an attempt to improve the sector's profitability and stimulate shipments of the cereal.

During an event at the Buenos Aires Cereal Exchange, Javier Milei stated that soybean export rates could also be reduced by between 0.25 and 0.50 percentage points in January next year, as long as the country's revenue allows this reduction.

The president also signaled future tax cuts for the automotive and petrochemical industries, highlighting that the details of these adjustments will be announced in the coming days.

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Wheat

Analysts estimate that the measure will still have a limited impact on the competitiveness of Argentine wheat on the international market and does little to change the supply scenario for Brazil.

According to Safras & Mercado analyst, Élcio Bento, the 2 percentage point reduction partially improves the exporter's margin and the price received by the producer, but still does not significantly alter the competitiveness of Argentine wheat on the international market.

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According to Bento, considering current prices, the cut represents around US$4.5 per ton to be distributed along the chain between exporters and producers. Still, he emphasizes that not all of this gain necessarily reaches the rural producer.

As Argentina is a price taker on the international market, the impact tends to appear more on the domestic market. Safras Argentina's assessment is that the measure may provide some support to local prices, but does not resolve the main obstacles to exports.

This is because Argentine wheat already appears expensive on the foreign market, while a lower FOB (translated as "Free on Board") remains limited by negative margins.

Bento remembers that, when the government reduced the rate from 9.5% to 7.5% in December, the practical effect ended up being neutralized by the drop in wheat prices and the appreciation of the exchange rate.

According to Safras & Mercado's analysis, the future curve for Argentine wheat was already indicating that the market was pricing in some type of reduction or even the elimination of retentions for the new harvest.

Even so, the announced reduction is still considered insufficient to bring about relevant changes in the price structure or in the competitiveness of exports.

For the old harvest, valid until November, the impact should be even more limited, as problems such as restricted supply, irregular quality and product retention by producers persist, who continue to hold back sales to preserve purchasing power.

The trend, according to the consultancy, is to sell only according to cash needs, purchase of inputs or payment of leases.

As for the new harvest, Bento estimates that Argentine wheat would only return to a FOB December of close to US$ 240 per ton if there was a total elimination of export duties.

With the partial reduction announced, the market remains expensive for exports, limiting the potential for a drop in FOB prices.

For Brazil, the assessment remains practically the same. Argentina should continue as the main reference for Brazilian supply, but the replacement cost will continue to depend on the quality of the product, the available supply, international prices and the Argentine exchange rate.

If Argentine wheat does not fully meet the demand for a product with a better breadmaking standard, Brazilian mills will be able to resort to more expensive origins, such as wheat from the United States.

With fiscal adjustment, Milei's Argentina improves external perception | MORNING CALL

Soy

In the soybean market, the reading is that Argentina continues to play a more relevant role in price formation than in the direct dispute for volumes.

Royal Rural analyst, Ronaldo Fernandes, highlights that the country should produce around 48 million tons, consume 49 million and export only around 8 million, which limits its presence in the global trade of fresh grains.

According to him, although Argentina expanded its participation in the international market in 2025, the movement tends to lose strength in 2026, with a decline in exports to something close to 6 million tons and a return to a level closer to normality.

Still, Fernandes emphasizes that the main impact is not on the volume exported, but on the formation of a price narrative.

He explains that, even without directly competing on a scale with Brazil, Argentine wheat and derivatives can influence international references and guide Brazilian prices.

China, according to Fernandes, should not buy large volumes from Argentina, but can use its prices as a reference parameter for global negotiations.

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Source: CNN