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November 22, 2019

Paraguay Soy Farmers Worried about Weather and Potential Taxes

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

It has been a frustrating planting season for soybean farmers in Paraguay. Irregular rains during September and October slowed the soybean planting resulting in the need to replant some of the soybeans. The rains have picked up in recent weeks and farmers are now finalizing their soybean planting. Even though the rains have increased, they are still not heavy enough to completely recharge the soil moisture.

If the rains continue to improve for the rest of November and into December, the soybean can recuperate and acceptable yields are still possible. Farmers are expecting better yields than last year when dry weather during the pod filling period resulted in losses of up to 40% in some areas.

The irregular rains have resulted in low water levels on the Paraguay River, which has disrupted barge traffic resulting in reduced offers for available soybeans. Farmers have not forward contracted very much of their anticipated 2019/20 soybean production due to the relatively low prices and uncertainty about their production.

In addition to weather and unattractive prices, farmers in Paraguay are also worried about the change in administrations in neighboring Argentina. On December 10th, Alberto Fernandez will take power as Argentina's new president along with his Vice President, Cristina Kirchner.

The reason why farmers are worried about the change in administrations in Argentina is because virtually all of Paraguay's soybean exports are barged down the Parana Rive to ports in Argentina. The prior administration of Mrs. Kirchner leveed a tax on Paraguay soybeans when they transited through Argentina and farmers are concerned that the tax will be reinstated once again under the new administration.

The new administration in Argentina will be under pressure to increase revenue to service its heavy debt load and it is widely expected that they will increase export taxes on commodities as one way of increasing badly needed revenue.