Sales of soybeans by Argentine farmers have slowed markedly, amid expectations that the country is poised to reintroduce its “soy dollar” programme offering an improved exchange rate for deals.

Argentine producers sold 165,500 tonnes of soybeans from their latest harvest in the week to November 16, down by one-third from the level the week before, and 74% less than the equivalent year-before figure, agriculture ministry data showed.

The slowdown – to the lowest level for the week in at least seven years – widened to 2.8m tonnes the shortfall in sales this year compared with a year ago, reversing more of the gains made in September when the government introduced a “soy dollar” programme to encourage farmer sales.

In offering an improved peso-dollar exchange rate, compared with the uncompetitive official rate usually applied, the scheme brought a splurge in sales of soybeans by Argentine growers, who have a history of hoarding crops as a dollar-denominated hedge against the country’s soaring inflation and weakening currency.

This strategy, while sensible for growers, is a headache for the government, which relies on Argentina’s exports of soybeans, and of the soyoil and soymeal produced by the country’s large processing industry, for significant tax revenues.

Return of the soy dollar?

The slower sales volume so far this season is a reflection in part of a weaker harvest, estimated by the ministry at 44.0m tonnes, compared with 46.0m tonnes in 2020-21.

Nonetheless, the proportion of soybeans marketed, at 73%, has now returned 3 points behind the level a year ago, having been 1.5 points ahead when the soy dollar scheme closed.

The data come amid rumours of the government mulling a further soy dollar programme, to encourage a fresh batch of sales.

Indeed, expectations of another such window is considered by some investors as a cause of the latest slowdown.

‘Self-fulfilling prophecy’

“You wouldn’t normally see this kind of a slowdown at this time of year,” a UK oilseeds trader told GrainPriceNews.

“This could be a bit of a self-fulfilling prophecy, in that the government now can’t afford not to open a new soybean dollar scheme, or just see sales back-up further.”

Sales, which ministry data show reached 7.4m tonnes during the four weeks of the scheme, total 1.6m tonnes for the following seven weeks.

Imminent announcement?

According to Michael Cordonnier, at Soybean and Corn Advisor, a new soy dollar programme may be announced “as soon as this week”, and offer similar terms to the September scheme, allowing dollars raised from soybean sales to be exchanged for pesos at a rate of 220-230 per $1.

That is about one-third above the official exchange rate, if still below the much-followed “blue dollar” levels above 300 pesos per $1.

“The programme may start as soon as December 1,” Dr Cordonnier said, adding that growers have been “very hesitant to sell soybeans during October and November in anticipation of” a further soy dollar window.

He added that “what farmers really want is a devaluation of the Argentine peso, but the government can ill afford a large devaluation while they are trying to negotiate payment terms for billions of dollars they owe the International Monetary Fund.

“While a large devaluation of the Argentine peso has not occurred, another ‘soybean dollar’ with a preferred exchange rate for the sale of soybeans is probably the next best thing.”

Wheat sales

There has also been rumour of a “wheat dollar” scheme to encourage farmers to sell their stocks of the grain, although such talk has subsided with the decline in estimates for Argentina’s drought-hit 2022-23 harvest, which the ministry pegs at 13.4m tonnes, down from 22.1m tonnes last season.

Sales of 2022-23 wheat in the week to November 16 totalled 78,700 tonnes, taking the total marketed to 5.71m tonnes.

For the same week a year before, farmers sold 399,500 tonnes of their 2021-22 wheat, to take the running total to 10.60m tonnes.