Argentine farmers, facing peso uncertainty, hoard soy despite high prices

BUENOS AIRES: Argentine farmers are shrugging off high soy prices and hanging onto all the beans they can this season in a bid to avoid exposure to the country's anemic peso currency, even as rival growers in Brazil and the United States rush to sell.

The trend hits just as Argentina needs export revenue to help dig itself out of recession while COVID-19 cases spike and uncertainty abounds ahead of October congressional elections. Farmers fret that the vote might set the stage for increased government intervention in the agricultural markets.

The official peso rate has meanwhile swooned 29.6% in the 12 months through Thursday to 92.4 per dollar. With this kind of currency volatility, Argentine farmers have decided a bean in the bag is better than a peso in the bank.

"Our currency is soy. We cannot rely on the peso," said Francisco Santillan, a grower in the bread-basket province of Buenos Aires.

Argentina is the world's top supplier of soymeal livestock feed used to fatten hogs and poultry from Europe to Southeast Asia. But as of March 31, farmers had sold only 31% of their soon to be harvested 20/21 soybeans, the government says.

At the same point last year, sales of the 19/20 crop were at 37%.

Soy and corn prices are at around seven-year highs as global supplies tighten. Last year at this time, Argentine farmers were getting about $220 per tonne of soybeans. Now it's at about $330 per tonne.

Farmers in top global producers Brazil and the United States have eagerly sold crops to lock in good prices.

Brazil farmers sold 66.6% of estimated soy output through April 2, well above a 57.1% five-year historical average for the period, consultancy Datagro said. It projects Brazil soybean output at 135.48 million tonnes in the 2020/2021 crop year.

One grain dealer in the United States, which is on an opposite growing cycle from South America, said some farmers are selling up to half of their next crop before even planting.