Although Agriculture Secretary Juan José Bahillo denied on Saturday that $3 soy is on the Economy Ministry’s agenda, the central bank’s difficulties adding foreign currency led to the beginning of exploration of the mechanisms that they would allow strengthen net reserves.

Once again, in a matter of dollars, the government is racing against time: the net reserves, those which the power plant can effectively dispose of, hover around US$ 4,400 million and the commitment undertaken with the IMF is to bring it to US$ 7,800 million by March 31.

The agreed goal seems practically impossible to achieve: so far in February, Miguel Pesce’s team has given up $903 million to cover market demand, even in the presence of import restrictions. And there are no prospects that suggest that this sales trend could reverse in the coming weeks, unless Minister Sergio Massa pulls another rabbit out of his hat.

In this scenario, the expectation that the third version of the soy dollar could be accelerated and act as a bridge until the heavy harvest arrives. With this program, the Government recognizes them for a limited period a more advantageous exchange rate to those who go out to sell their production.

Although the original expectation – also not confirmed by the government – was that the soybean 3 dollar would arrive together with the April/May bumper harvest, the Central Bank’s poor performance could lead to the emergence of a new version of this plan for take advantage of the liquidation of the remaining oilseeds from the past harvest.

In addition to the lack of dollars, another reason that would push the soybean 3 dollar advance is that the drought has delayed planting, which means that part of the harvest that was expected in April will only arrive in May.

According to Portfolio Personal Inversiones (PPI), to achieve the target agreed with the IMF, the BCRA would have to purchase virtually the entire remaining stock of soybeans from between 6 and 7 million tonss which, in dollar terms, would be equivalent to $3.4-4 billion.

This was underlined by the consulting firm Delphos “the government is faced with the need to pull another ‘bunny’ like a ‘dollar 3 soybean’, a REPO loan or some other similar measure out of the hat. Another option could be to formally request a “waiver” of the March Reserve Target Fund due to the extreme drought the field is facing and then implement a soybean dollar in the second quarter.”

According to the PPI estimate, net reserves are a US$4,462 million, for which BCRA needs to increase its cash flow by US$4,800 million be at peace with the IMF.

“It is probable that, as happened in September and December, the economic team re-elects the soybean dollar as a mechanism to get closer to the reserve target”, underline from PPI.

The macroeconomic report of CREA, the body that brings together agricultural entrepreneurs, indicates that previous versions of the soybean dollar have played a key role in enabling the Central to achieve its reserve accumulation objectives throughout 2022.

They detail that in the months when the soy dollar was in effect, the Central Bank bought 1,624 million dollars while in the rest of the year the monetary authority closed with an average sale balance of 147 million dollars.

Thus, the government is now suffering from a shortage of soybeans which it monopolized in the previous months. And it remains a prisoner of its own strategy, since with the backdrop of 2022 in this harvest, producers are holding on to silobolsas waiting for the exchange rate to improve.

Not all Central’s woes are a consequence of local politics. The international context also played against him, with the Federal Reserve bringing the rate to 4.5%, which makes it difficult for emerging countries to maintain the currency.

For this reason, they score from CREATE that “Measures of exchange rate differentials are expected to be deepenedthe exchange rate differential, restrictions on the purchase of foreign currency and imports”.

AQ