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June 2, 2014

Argentine Farmers are Slow Sellers of their 2013/14 Soybeans

Argentine farmers continue to be very slow sellers of their newly harvested soybeans. The Minister of Agriculture reported that farmers had sold 29% of their anticipated production as of the third week of May. In more normal times, this level of sales is generally reached at the end of March. Farmers were slow sellers in 2013 and it looks like they will be even slower sellers in 2014.

There are two main factors that have kept sales slow. The first is the weather which has been very wet. The soybean harvest is running several weeks behind average with only 75% of the crop harvested. The second factor is the fear of inflation and the potential devaluation of the Argentine peso. Farmers realize that their grain is their hard asset and they know that having grain in the silo is a much better option than having pesos in the bank.

They will eventually get all their soybeans harvested, but the economic situation in the country shows no signs of improving any time soon. Therefore, it is anticipated that they will continue only sell only enough of their production to pay immediate bills.

The Argentine government has been trying to encourage farmers to let go of more of their soybeans because they need the revenue from the export taxes to stabilize their dwindling reserves. It is unclear if the government will try to force farmers to sell their grain, but one thing is clear, any draconian action on this front would be met with fierce resistance from the farmers.