There is speculation in Argentina that the country may follow its “soy dollar” plan, which attracted a wave of crop from farm stocks, with a similar scheme for wheat, US officials said – although seeing exports at a seven-year low nonetheless.

Some farmers believe that Argentina’s shortage of foreign currency may prompt it “to implement a similar scheme as the ‘soy dollar’ put in place during September, which encouraged producers to sell a large portion of their production”, the US Department of Agriculture’s Buenos Aires bureau said.

The soy dollar scheme enabled farmers, during a four-week window, to sell the oilseed at a favourable exchange rate versus the dollar compared with the official level – closer to the peso values seen on the open market.

“At present, the gap between the official exchange rate and less formal exchanges rates exceeds 90%,” the bureau said.

‘Slow farmer selling’

The soy dollar programme encouraged Argentine farmers – who typically hoard crop as a hedge against inflation, which exceeds 90% in the South American country – to price some 13.7m tonnes of soybeans, equivalent to one-third of their latest harvest, and a spree which helped drive Archer Daniels Midland to forecast-beating profits.

A similar scheme for wheat stands to accelerate selling which has left exporters, which have received clearance for 8.4m tonnes of shipments from December to February alone, short of crop.

“Local exporters believe that the shipment pace will be slower given… slow farmer selling,” as well as drought damage to the crop, the bureau said.

“To date, roughly 30% of the total [2022-23 wheat] export potential has been purchased and priced.”

‘Shipments could be even smaller…’

However, the scope for wheat sales – even should the government unveil a “wheat dollar” plan – is limited by the drought damage to the crop, which the bureau pegged at a seven-year low of 15.5m tonnes.

That is 2.0m tonnes below the USDA’s official forecast, although in line with estimates from the Buenos Aires and Rosario grain exchanges.

“Due to persistent dry conditions, potential wheat production has been falling steadily across the country,” the bureau said, adding that in some areas “damage is so extensive that fields are being abandoned”.

The bureau estimated Argentina’s wheat exports in 2022-23, as will start in December, at 10.0m tonnes, which would be the lowest since the 9.60m tonnes shipped in 2015-16, and is 2.0m tonnes below the USDA’s current forecast.

“Shipments could be even smaller if unfavourable weather continues to damage the crop.”

Corn vs soybeans

The bureau lowered its forecast for Argentina’s 2022-23 corn production too, citing high input costs as well as “severe drought and resulting the lack of soil moisture” as sowings of early crop proceed.

Corn’s large appetite for inputs such as fertilizers, prices of which have soared, “has encouraged some farmers at the margin to shift some of their planned corn acreage to soybeans.

“For the same initial investment, farmers can plant almost two hectares of soybeans for every hectare of corn.”

The bureau cut to a three-year low of 52.0m tonnes its forecast for Argentina’s corn production in 2022-23, with exports pegged at 37.5m tonnes, 3.5m tonnes below the USDA’s official estimate, “primarily” because of the smaller harvest expectations.