Argentine farmers seen hoarding soy as prices lag

 

 

Argentine soy farmers will sell this year's harvest slowly in the hope of higher prices as expectations of bumper production in South America weigh on global grains markets.

 

As growers start to gather the first 2009-10 soy in the world's No. 3 exporter, the harvest is forecast at a record of about 53 million tonnes which would raise some US$17 billion in much-needed hard currency.

 

Argentina's government needs to maintain a healthy trade surplus as it seeks to tap foreign reserves to pay rising debt obligations this year. Hefty export taxes on grains also mean higher revenues for the cash-strapped government.

 

However, the nation's farmers will likely sell their beans slowly, opting to stash them in giant, plastic silo bags on the farm while they wait for better prices.

 

"Farmers could sell 40% of the harvest between March and June this year. The rest will be sold in the second half of the year," said Pablo Adreani, director of the AgriPAC consultancy in Buenos Aires.

 

Sales of silo bags have boomed in Argentina in recent years due to political uncertainty and government intervention in the export market, which has reduced appetite for forward sales.

 

Many farmers prefer to keep hold of their harvested crops rather than leave the proceeds in the bank or invest in supplies for the next growing season.

 

Meanwhile, spot soy traded at 847 pesos (US$217) per tonne in Rosario on Wednesday, languishing close to an one-year low and convincing farmers to keep hold of their beans.

 

The FAS (free alongside ship) price does not include the hefty 35% tax on soy at the heart of an ongoing dispute between the country's farmers and the centre-left government of President Cristina Fernandez.

 

Tensions have eased since the farm strikes and roadblocks of 2008, although some hard-line agricultural groups are urging growers to protest government policy by holding on to their soy.

 

They are dissatisfied at wheat and beef export curbs imposed by Fernandez in a bid to keep a lid on food prices in a year when inflation is expected to accelerate to at least 20%.

 

However, a repeat of the commercial strikes of the last two years appears a distant possibility for now and farm leaders are instead seeking policy reforms in Congress after the government lost its majority in a mid-term election last year.

 

Hoarding by soy farmers fell under the government's radar early last year, when officials took steps aimed at forcing farmers to sell as a means of easing ease downward pressure on the peso currency.