Soy dollar rumors have little effect on soybean sales in Argentina

Rumors of a new soy dollar in Argentina had little effect on soybean farm sales when compared with the previous rounds of the special exchange program, with farmers continuing to sell instead of waiting for a new program to pay production costs.

The Argentinian government has denied plans for a new soy dollar exchange program after the rumors began a few days ago.

There was a slight reduction in sales after the rumors gained strength in the country, with sales dropping to 118,000 tonnes on Wednesday versus the peak of 161,000 tonnes on Tuesday March 12, data from Sio Granos shows.

The platform, which gathers information on grain sales in the country, shows 589,000 tonnes of soybeans were sold last week, including cash sales and price fixation, surpassing the best weekly volumes in December, before the massive devaluation of the peso.

Previously, sales fell significantly after rumors of a dollar program began to spread because farmers would save beans to sell at a better price.

“The sales we are seeing are physical soybeans that the producer has from the last crop, the producer is selling to cover the need for operating cash even with low prices,” analyst Javier Preciado Patiño told Fastmarkets.

The new crop harvest will start in April and Argentina is expected to recover from last year's losses due to drought and harvest around 50 million tonnes.

Patiño believes that there are more soybeans available from 2022/23 than initially expected and the market is responding to that offer.

“Possibly, the harvest is closer to 25 million tonnes than to 21 million tonnes,” he added.

The first is the official estimate from Argentina’s secretariat of agriculture, livestock and fisheries, SAGyP while the second is the Buenos Aires Grain Exchange Bage estimate, while Rosario Grain Exchange BCR sees the crop at 20 million tonnes.

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Although the government says it does not plan to launch a new round of the exchange rate program similar to those implemented over the past two years, analysts say the measure would be necessary to stimulate sales.

“The government will need to implement a soy dollar to speed up the dollar inflow in Argentina as there is no other source able to add $15 billion to stabilize the reserves and give stability to the economy,” Patiño said.

Currently, an exporter dollar program is in force, which is a mixture of the official dollar and the financial dollar, a continuation of measures adopted by the previous government. But sales have not picked up noticeably as they did in the previous soy dollar programs.

“I believe producers are not selling much because of the low prices, because they may be waiting for a change in the dollar-export exchange rate and because of the great economic uncertainty that makes their grain the safest form of security,” Paulina Lescano, agricultural engineer and specialist in agricultural markets, told Fastmarkets.

“A new soy dollar or a strong devaluation would be a way to stimulate selling. I do not think this is good for the Argentinian economy, but I believe it would make some producers sell soybeans to take advantage of the preferential exchange,” she added.