As peso hits record low, Arg. farmers may still sit on beans

The recent slump in the value of the Argentine peso versus the US dollar is pushing export prices of soybeans in pesos to the highest they have been in almost six months, Agricensus data shows.

Rising inflation pushed the value of the peso to a record low of 42.65 versus the dollar on Tuesday, which has in turn underpinned a rise in the value of soybeans in the domestic currency.

According to Agricensus data, the price of soybeans loaded on to vessels in the Up River complex were $330.25/mt on Tuesday, but in peso terms that equates to ARS14.095/mt - the highest since September.

However, trade sources were split as to whether this would increase farmer selling, which is currently very low.

One market source said he expected the upcoming harvest combined with the weaker peso to see farmers price more of their crop, but other sources were less optimistic.

"I expect by far more corn selling and pricing than beans ... farmers hold on tight to their beans since they know how to make money with crushers needs. Farmers finance their activity selling grains... [so] beans at this prices (very low) should not be sold by them," a second market source said.

In South American countries, farmers tend to contract the beans and price them at a later date.

Official Argentine government data released for the period up to 13 March supports this trend, showing that of 8.7 million mt exported this marketing year, less than a quarter (2.01 million mt) had so far been priced. 

But this data also shows a similar trend for corn. Only 13% of the 2017/2018's 23.7 million mt harvest has been priced as of 13 March. 

Soybean prices in Argentina have slumped over recent months as Chinese buying interest has dissipated, as a thaw in trade relations with the US has seen state-owned buyers purchase 12 million mt of American beans since December. 

In addition, China - the world's biggest buyer - is battling an outbreak of African swine fever, which is cutting the pig herd, and hence demand for soymeal and soybean, between 15-20%.

Competitive

Nevertheless, the weaker peso has seen offers for beans fall marginally, with May shipment offers falling to 15 c/bu under July compared with 6 c/bu a week earlier - a fall of $3.30/mt.

And that comes despite weaker futures.

Prices at these lows have triggered buying in China.

Reports emerged Tuesday of Chinese buyers actively seeking out Argentinian cargoes. At least one May shipment was concluded at 90c/bu over July futures on a CFR basis when Sinograin purchased from ADM.

While other sources say China stockpiler Sinograin is also seeking to switch Brazil cargoes for Argentine ones.