Soybean dollar: the government insured September

Specifically, the measure announced yesterday evening by the Minister of Economy Sergio Massa aims to secure 5 billion dollars for the month of September. They will be supplied by the export sector, the last link in the soybean agro-industrial chain. According to the minister himself, a billion will enter between Monday and Tuesday. In exchange, the government assures the chain a dollar of 200 pesos, instead of the 145 that is worth the official dollar. That’s a 35% improvement.

This would allow exporters to raise the price they pay today for soybeans (53,000 pesos per ton) to 70,000 pesos. So Sergio Massa recorded it, with whom practically left an established “list price” which will be the reference value from now on. And operating as a kind of bra price.

This regime is much simpler than the failed system designed by the Central Bank just over a month agowhen there was an increasing retention of soybeans stored by producers in their silobags.

You know exporters enter foreign currency to purchase the goods they are going to process and ship, converted into high protein flour, oil, lecithin, biodiesel and other value-added derivatives. In other words, it’s not the producers who have the dollars.

When producers are not selling, the first complication is for the export industry, which cannot liquidate dollars without knowing how much it will have to pay for soy when producers decide to sell it. and parallel public accounts are complicated, because the Central Bank doesn’t have the dollars it needs to meet the demand of importers and their external commitments.

The provision has a temporary component, it being understood that since a fixed-term deadline is foreseen (30 September), producers will hurry to settle before that date. The most likely scenario is that the merchandise begins to appear. And not just for this 35% increase in the value offered up to last Friday, but why From September the pyramid of investments necessary for the sowing of the next campaign begins to rise.

Producers cling to soybeans (even some corn and very little wheat) because that’s how they keep their profits in order. Faced with high inflation and exchange rate uncertainty, they are divesting their holdings only to meet their operational needs. And also for the purchase of capital goods. The excellent evolution of agricultural machinery sales in recent months has been a clear expression of this behavior. Some delays in the delivery of equipment, coupled with the worsening of the political and economic climate, were cooling the sector and this also took away the stimulus from sales of soybeans.

We’ll see what the reaction will be now. Juan Carlos de Pablo says so “the price is when the goods appear”. The 35% improvement is evident. A $ 200 dollar is something every industry dreams of. But on the ground they know that of those 200 pesos, 35% will be captured by Afip / Customs through withholding. Like this the net will be a dollar of $ 130. But last week it was $ 94.

A journey of a thousand miles begins with a first step. The minister said “for us the agri-food sector is fundamental“. He also spoke of “global food security: Argentina is a major protein player” and mentioned the importance of addressing a short term Agri-food law. In the midst of political chaos and the explosions of uncompromising Kirchnerism, it is difficult to avoid the sensation of siren song. Time will tell.