BUENOS AIRES: Argentine farmers are hoarding 21.5 million tonnes of soybeans harvested this season, according to government data, as low world prices and financial uncertainty at home prompt them to hang onto a higher percentage than they did a year ago.
Growers are selling “hand to mouth” as one grains export executive put it, releasing just enough into the market to pay taxes, inflation-sensitive operating costs and bank loans that have become more expensive since Argentina’s July debt default. Global 2013/14 soybean output was 283.1 million tonnes, of which 7.5 percent is being held on Argentine farms.
At the official free on board (FOB) price, the reserves being held from the market are worth $9.7bn. If they were to be released it would put downward pressure on global soybean prices already near four-year lows. Argentina is the world’s No. 3 soybean exporter and top supplier of soymeal livestock feed, which is fuelling Asia’s shift toward a higher-protein diet.
A gulf between the Argentine peso’s official rate and black market rate is increasing expectations of a sharp devaluation before the year’s end. The currency is under pressure from high inflation, a shrinking economy and the government’s failure to make a July sovereign bond payment.
President Cristina Fernandez has ruled out a hefty intervention on the currency market but has failed to convince local markets, meaning growers are likely to keep hoarding soy to use as a unit of savings preferable to the peso.
Growers harvested 53 million tonnes of soybeans in the 2013/14 crop year, up 9.5 percent from 2012/13 season, according to the agriculture ministry.
Reuters
