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Argentine Political Swing Hits Glencore Partner at Top Soy Plant

Jonathan Gilbert, Michael Hirtzer and Isis Almeida
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Argentine Political Swing Hits Glencore Partner at Top Soy Plant

(Bloomberg) -- Fallout from Argentina’s flip back to an interventionist government has put crop trader Vicentin SAIC in a financial bind.

The nation’s top shipper of soybean meal and oil is working out how it can make good on $350 million of payments it missed this week to farmers while it restructures debt worth even more, the firm said Thursday via an external public relations representative.

Vicentin, which operates a joint venture on the Parana River with Glencore Plc, said it’s been hurt by recurring crises in Argentina, including high borrowing costs. Argentine markets collapsed earlier this year when President-elect Alberto Fernandez trounced business-friendly incumbent Mauricio Macri in a vote. That’s because investors anticipated measures like a return to high export taxes, as well as price and capital controls that marked the administration of Fernandez’s running mate, Cristina Fernandez de Kirchner.

With the Fernandez duo taking office next week, farmers -- moving to skirt the expected tax hike -- have been hurrying to complete sales of a huge volume of soybeans.

That’s put Vicentin on the back foot, and the liquidity squeeze could change how soy crushers in Argentina trade, according to Chicago-based AgResource.

“Argentine exporters and crushers will move to doing business on more of a spot basis, compared to offering product out months in advance as has been the case in recent years,” AgResource analysts wrote in a report.

While full details of Vicentin’s financial stress are unclear, the news helped trigger a rally in Chicago soybean meal futures. Gains in January meal of as much as 2.2% are the biggest since Nov. 7. Argentina is the top exporter of soy meal, used for animal feed.

Vicentin’s predicament raises concerns about Argentina’s capability to keep up global supplies of soy products, according to Michael McDougall, a broker at Paragon Global Markets in New York.

“If one of the larger crushers is already having issues, even before the new government comes in and most likely increases export taxes, then the caution factor will rise even more,” McDougall said. “So we are already seeing demand for meal.”

Renova, the JV with Glencore, operates the world’s biggest soybean processing plant. Last year, Vicentin shipped out 5.3 million metric tons of soy meal and oil.

Rosario-based news portal PuntoBiz first reported the news.

To contact the reporters on this story: Jonathan Gilbert in Buenos Aires at jgilbert63@bloomberg.net;Michael Hirtzer in Chicago at mhirtzer@bloomberg.net;Isis Almeida in Chicago at ialmeida3@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Reg Gale

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