December 22, 2015
Argentina's currency devalues; more soybean expected to hit market
The global grains market is expected to receive a significant amount of soybeans from Argentina's stockpiles as the country's currency devalues, the Hellenic Shipping News reported.
According to Ernesto Ambrosetti, a chief economist at the SRA, Argentine Rural Society, devaluation would benefit local growers with close to 13 million tonnes of soybeans bound for the market. "We expect those to be sold between now and the next harvest in April and May," Ambrosetti said.
Argentina's soybean export will be supported by two factors: the citizenry's full access to the US dollar; and an exchange rate permitted free movement following years of stringent control by the country's central bank. As a result, a 30% devaluation of the peso could occur.
These developments would lead to increased profitability for farmers who would earn from their grains in dollars.
Since his inauguration as President of Argentina, Mauricio Macri had pushed for higher grains production as well as abrogating corn and wheat export taxes. Export curbs may eventually be removed, having received flaks for killing farmer profits. In addition, Macri promised to revitalise the Pampas farm belt with free market policies.
New policies for wheat and corn are expected to boost cultivations by 2016. These measures will improve crop rotation and mitigate the problem of soybeans being planted excessively.
In the current season, most of Argentina's corn cultivations are already completed. For wheat of the 2015/16 season, about 4.5 million tonnes had been exported, with that volume possibly increasing to 7.4 million tonnes next season.
Argentina is the world's number three soybean exporter and top supplier of soymeal feed. During Macri's first presidential term (ending in 2019), national grains production for the future is estimated to reach 130 million tonnes yearly, more the present volume of 100 million tonnes.