In a stunning pattern highlighting the issues confronting the agricultural industry, Argentine farmers are selling their soybean crop at the slowest rate in ten years.
Argentina, the world’s top supplier of soybean oil and meal, is cautious, motivated by forecasts of a weaker peso and anticipated government tax reduction under libertarian President Javier Milei.
Record-low sales
According to recent Argentine official data, farmers had sold only 8.4 million tons of soybeans for the 2024/25 harvest as of March 19, accounting for 17.3% to 18.1% of the estimated crop volume.
This result is in sharp contrast to the 2014/15 season, when sales increased by 15.7% over the same period.
Furthermore, sales levels are 25% lower than they were this time last year, indicating a major shift in producer behavior as economic uncertainty persists.
According to Reuters, Pedro Jaquelin, a farmer from Pergamino, Argentina’s grain hub, provided insight into the situation, stating, “Producers are selling only what they need to cover their expenses (…) Another year of waiting to see what happens, especially with the exchange rate”.
This mindset reflects a broader strategy among farmers to postpone harvests in anticipation of improved market conditions, particularly a rise in the peso’s value.
Weight of the Peso
In light of the continuing issues with the currency, even farmers and merchants have begun to bet on a more expedited devaluation of the peso.
The extra anticipation follows an anticipated $20 billion IMF loan agreement that might salvage Argentina’s finances.
Peso futures have risen sharply since mid-March, suggesting that traders are betting on even larger shifts in the currency’s value within a short time frame.
Local crop prices are calculated in dollars with producers getting paid in pesos; if the currency devalues, that can create a win for the farmer.
Hence, the more recent slow sales are a result of the producers’ free choice to hold their soybeans until they can see an exchange rate that will benefit their balance sheets.
“The data didn’t correlate, and you add in the uncertainty,” said Jaquelin.
Producers are hoping for a change.
This reluctance to sell early reflects the farming community’s shared desire for better financial incentives.
Consequences for Milei’s administration
The consequences of slow soybean sales go further, hitting the economy as a whole and the administration of Milei.
Soy is the biggest generator of foreign exchange for Argentina, which is why the government is well aware that strengthening reserves to stabilize the local peso has to come from increasing them.
Soy oil and meal exports are key earners of this income, and lower sales can make it harder for the government to return to its pre-pandemic financial situation.
Milei’s government has promoted economic liberalization and reform, leaving them with a two-fold task of trying to tackle farmers’ urgent demands and at the same time deal with broader economic issues.
All this has combined to create pressure for the administration to introduce policy measures to stimulate soybean sales and farmers’ confidence over the chaotic currency situation.
Looking ahead
The Argentine agricultural sector is still in a bind as the situation develops.
The uncertainty of the economy pulls farmers into the perilous balancing act between hanging on to their crops and relying on the immediate reward.
Whether hopes by producers, private analysts and advisors for an unfettered export course will deliver dividends only time will tell, but if they prove misplaced then a burgeoning pile of soybean sales stacking up in the country may leave those same producers with a bill for making the economic path back to health even harder for Argentina.
In the meantime, farmers are simply biding their time, fighting their battles with a patient, wary resolve.
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