January 9, 2015

Argentina's grain farmers heeded  call to boost central bank reserves

Argentina's grain and oilseed farmers went to the rescue of their country's economy as they exported over US$365 million worth of their produce in the last two days of 2014 to beef up the country's foreign exchange reserves.

Earlier in October, President Cristina Fernandez de Kirchner urged farmers to stop hoarding their harvest and sell to replenish the central bank's reserves, which plunged 37% to US$27.3 billion that month. As of September hoarding was estimated at $3 billion, according to Cabinet Chief Jorge Capitanich.

Helped by fourth-quarter sales of grains farmers, reserves stood at $31.4 billion at yearend, according to central bank data. Argentina, gets about one-third of its export revenues from commodities. 

According to the exporters' group Ciara-Cec, farmers sold a total of $24.1 billion of grains and oilseed last year, although it fell short of the previous record of $25.1 billion set in 2011. 

"The sizeable 2014 harvest, as much as the measures taken by the government during the first half of 2014, were critical to stabilize the economy," Sebastian Vargas, an economist at Barclays Plc in New York, was quoted as saying in a media report.

As the world's largest soybean oil and derivatives exporter, Argentina harvested a record 53.4 million tonnes of soy,  last year, exceeding the prior record of 52.7 million in 2010, according to data from its Agriculture Ministry.