Nov 21, 2022
New "Soybean Dollar" May be Implemented in Argentina
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
It is anticipated that the Argentine government will announce as soon as this week another incentive program for farmers to sell their remaining 2021/22 soybean stocks. The program is expected to be similar to the one in September that offered an exchange rate above the official rate. The new "Soybean Dollar" as it is being called, would allow dollars generated by soybean sales to be exchanged for pesos at a rate that could be between 220 and 230 pesos per dollar. The program may start as soon as December 1st.
A similar program during the month of September was very successful in getting farmers to sell their 2021/22 soybean production. It is estimated that 13 million tons of soybeans were registered for the preferred exchange rate during the month of September.
When the program ended on September 30th, farmers stopped selling their soybeans. They were very hesitant to sell soybeans during October and November in anticipation of another incentive program. An estimated 16 million tons of soybeans still need to be priced in Argentina.
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.