Buenos Aires, August 14th. “No matter who wins, the farmers only are viewing the Chicago prices and the exchange rate”, a grain trader told to eFarmNewsAr this Wednesday, after three days of economic chaos in Argentina. After the results of the primaries were known, the dollar jumped from AR$46 to AR$60, the country risk rocketed from 900 to 1,700 points and the interest rate climbed to more than 74 percent.
Without any market reference, grain operations dropped this Monday. In the futures market MR (MatbaRofex) only 46K tons were hedged, and 85K tons were operated in the spot market (Siogranos) between soybean, corn, and wheat.
The abrupt Peso depreciation meant a 30% increase of the grains expressed in local currency. Despite most of the farming costs are valued in dollars, devaluation of the currency increases the purchasing power of farmers in the domestic market, which not reacts so quickly to the new currency rate.
Thus, this Tuesday the grain markets tried to normalize. Operation in the MR futures exchange jumped to 341K tons, pushed by the soybean, which represented two-thirds of the total volume. Also, spot operations recovered to 270K tons, most due to the corn sales, that summed 206K tons.
“Although nobody knows how much the dollar will cost tomorrow, many farmers were interested to sell yesterday”, an official from Roagro trading house told eFarmNewsAr. “But rumors about a new increment of export taxes paralyzed the operation. Soybean September prices lost 5 dollars per tonne in a few minutes, and operation stopped; when the minister of Agriculture denied this rumor, the market resumes operations”, the source added.
It is estimated that 24 million metric tons of soybean have not still been sold, worth US$8,000 million. Both, the current government and the opposition need this money to deal with a country in bankruptcy.