The measure alleviates the margins of Argentine producers, but is still insufficient.
On January 27, 2025, through decree 38/2025, the government of Javier Milei officially reduced the 'retenciones' and eliminated the tax in the so-called "regional economies" by the middle of this year. Despite easing producers' margins, the measure is still considered insufficient.
What are 'retenciones'?
'Retenciones' are a tax on agro-industrial exports, which directly affects the value of exported products. This tax is applied by the Argentine government with the aim of raising revenue and controlling domestic prices. Higher retenciones can reduce the competitiveness of producers in the international market, impacting their profit margins.
Reduced rates
Product | 2024 | 2025 |
Soybean | 33% | 26% |
Soybean meal | 31% | 24,5% |
Soybean oil | 31% | 24,5% |
Corn | 12% | 9,5% |
Wheat | 12% | 9,5% |
Barley | 12% | 9,5% |
Sorghum | 12% | 9,5% |
Sunflower | 7% | 5,5% |
Biodiesel | 23% | 23% |
The Argentine government's goal is to ensure that producers become more competitive, especially as they face adverse weather conditions that are expected to reduce the productive potential of their crops, generating even more concerns and financial fragility. The measures are valid until June 30.
Impact in Brazil
A comercialização brasileira do complexo soja pode sentir o impacto das mudanças nas retenções na Argentina, especialmente nos derivados. Para analistas, os produtores argentinos terão cinco meses para conseguir um prêmio na sua soja, por exemplo, considerando o preço FOB na Argentina.
Market
With this measure, it is estimated that the supply of soybean meal will increase by approximately 2 million tons; producers who leased their crops will still have negative margins.
The impacts on Chicago Stock Exchange prices were immediate, with drops of 11 points for soybeans, 4.25 points for corn, 8 points for wheat and 3.8 points for soybean meal, due in March.
Margins of Argentine producers
Even with lower withholdings, producers still face difficulties. Calculations show that reducing the tariff for soybeans, for example, reduces the cost of taxation from US$445.83 to US$351.26 per hectare, but costs remain high. Gross margin improves to US$89.43, compared to the negative US$51.44 previously. For corn, the producer's margin would be US$112.44 per hectare after the reduction in withholdings.
For producers who lease land, margins remain negative even with reduced withholdings. According to an Argentine farmer and trader, the reduction in 'retenciones' is already a good sign for the sector, but real benefits will only be achieved when withholdings are zero for all levels of production.
Credits: Noticias Agricolas
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