Argentina offers preferential exchange rate to soybeans to strengthen reserves

The Argentine government enabled again and for two months a preferential exchange rate for soybean producers, with the aim of stimulating exports and thus strengthening the reserves of the Central Bank, according to a decree published this Monday.

The plan is to “increase the reserves so that the economy reaches the end of the year with 10,000 million dollars freely available to have a back and that tomorrow speculation does not unbalance us,” explained the Secretary of Industry, José de Mendiguren, to Futurok radio on Monday.

The incentive, which will be valid from this Monday until December 30, establishes a price of 230 pesos per dollar for soybean producers to liquidate grains for export. The figure is well above the official price of the green ticket, which is around 166 pesos per dollar in the wholesale range and 170 pesos per green ticket for the general public.

Nobody wants several exchange rates, the economy must be normalized and stabilized, but it is a solution, a tool for exceptional circumstances that Argentina is experiencing today,” De Mendiguren said.

This exchange stimulus plan for soybean producers is similar to the one that governed the sector last September, a period in which some 7.6 billion dollars in grains were liquidated.

Many soybean producers, Argentina’s main crop, keep crops in stock waiting for better sales conditions, in a context of exchange controls.

According to a report from the Rosario Stock Exchange, there are still some 8.6 million tons of the oilseed to be sold.

Argentina is one of the largest exporters of soybean oils and meals in the world, an export complex that leaves the State with annual revenues of more than 10,000 million dollars in revenue, out of total sales of 40,000 million.

The country’s gross international reserves are around 37.6 billion dollars, but analysts point out that the net ones are much lower.

Argentina must comply with reserve strengthening goals within the framework of the credit agreement with the International Monetary Fund for 44,000 million dollars.

Under that agreement, Argentina must also reduce its fiscal deficit from the equivalent of 3% of its Gross Domestic Product in 2021 to 2.5% this year, 1.9% in 2023 and 0.9% in 2024.