On 30th March, the Argentinian government announced its plan to implement a new ‘soy dollar’ preferential exchange, effective from 1st April, to boost exports amid lower output this season. Extreme dry weather in Argentina has led to incessant downward revisions to crop estimates, with the Buenos Aires Grain Exchange latest estimate pegging the crop at 25 million metric tonnes, representing a 42% y-o-y decline. As the Argentinian economy is reliant on its crop trade, being the top soy oil and meal exporter, among other commodities, this year’s soybean production decline has hit the Argentinian economy. The Rosario Board of Trade (BCR) cut the nation’s GDP by $19 billion, compared to the $1 trillion reached in the previous year.
The ’soy dollar’ scheme is not new, as it was used last year to create liquidity on the market due to macroeconomic challenges including high inflation and currency volatility. According to the government, the scheme was successful and strengthened the country’s central bank reserve, with higher international sales. With depleted reserves this year, the new ‘soy dollar’ scheme aims to incentivise farmers to sell crop without the need to exchange their dollar revenue back to local currency at a lower exchange rate. The Mintec Benchmark Prices [MBP] for Soybean Oil FOB Argentina was assessed at $1,011.97 on 30th March.
