Argentina's Farmers Sit on Wall of Soybeans
Argentina has sold approximately US$ 10.1 billion in grains so far this year, according to data from the Center of Cereal Exporters of the country. But the country's farmers are still sitting on nearly twice that amount, with no intentions of selling anytime soon.
In stocks, there is an approximate value of US$ 19 billion in soybeans, and the sales of that amount are not seen on the horizon.
This strategy was already used several times by Argentine farmers over the last few years, in order to protest against government policies by not generating dollars in the economy, and betting on better soybean prices. This time around, the main reason is an expected major devaluation of the Argentine Peso against the U.S. dollar.
According to Lorena D'Angelo, an independent analyst from Rosario, there are already daily micro-devaluations happening. "There is a perspective of a bigger devaluation in the short-term. A lot of people bet that this would happen during the (Soccer) World Cup," she explains. During the World Cup, South Americans tend not to pay very much attention to politics or the economy.
Guillermo Rossi, director of information and economic studies at the Rosario Board of Trade, says that a huge devaluation would take place in 2015. The dollar futures are already negotiated in Argentina at a rate of AR$ 11.03 for June of 2015. As of today, US$ 1 buys AR$ 8.08 through the official rate. Therefore, the devaluation of the Peso would be 30%.
TFor Rossi, an interesting factor are real stocks in Argentina. The number is disputed by the different organizations. The Rosario Board of Trade estimates 4.5 million tons of soybeans leftover from the 2012/2013 season by March, leaving 35% of the total production of 55.7 million tons of this year would be in stock. "Keeping soybeans in Argentina is relatively sensitive because of the popularity of silobags. Each one allows a storage between 60 and 250 tons with an average cost of US$ 3 per ton. Our capacity of storage in silobags might be superior to 30 million tons," reveals Rossi.
Lorena D'Angelo believes the grains would not remain stored a lot longer than August. The reason is that farmers need to pay debt kicked out to the end of June. "And also they need to prepare for the new crop in August," she adds.
Recently, Argentina's National Institute of Agricultural Technology (INTA) announced that the country's soybeans have the lowest level of proteins in at least 17 years. The level of those grains are at 37.2% average – one of lowest levels since this type of research started. The soybean fat matter also worried locals. The level is at 21.6%, also a historic low. The INTA said that the problems are a consequence of a higher number of cloudy days that impeded the ideal radiation for the crops.
Juliana Albertengo, responsible for Technological Prospects at the Association of No-Tillage Producers of Argentina, was asked about the impact of the long retention of soybeans on the quality of the grains in an event that gathered no-tillage farmers in Gramado, Rio Grande do Sul, in Brazil. She said that this is not a major factor. "A colder weather puts less pressure on those grains stored," Albertengo explained.