Farmers in Argentina rushed to sell stockpiled soybeans this week after the government implemented a temporary devaluation of the peso intending to spur exports. The influx of low-priced supplies to the global market just as the US is preparing for a bumper harvest could pressure global prices.
In the four days since the Argentine government’s currency policy went into effect, sales to exporters accounted for a whopping 2.45 million metric tons, or 8.5 percent of the total crop.
Additionally, farmers have completed transactions on delayed-price contracts for an additional 1.21 million metric tons, meaning that 3.66 million metric tons of soy have been traded since the weaker exchange rate was put in place.
The supply increase may help cap prices for the commodity used in animal feed, cooking oil and fuel that have increased 45 percent in the past two years, offering some respite to rampant inflation. It is also bad timing for US farmers as the US Department of Agriculture estimated a record year for domestic soybean production.
A closely-watched industry tour of domestic crops in late August forecast a harvest of 4.535 billion bushels (123.4 million tons), slightly above the USDA figure.
by Diego Lasarte, Bloomberg