© Reuters. FILE PHOTO: Corn plants are seen at sunset in a farm near Rafaela, Argentina, April 9, 2018. REUTERS/Marcos Brindicci/File Photo
By Maximilian Heath
BUENOS AIRES (Reuters) – Argentina’s grains trade is largely “paralyzed” by a lack of soybeans due to drought and farmers holding onto produce, anticipating a devaluation of the peso under President-elect Javier Milei, the head of the main export chamber told Reuters.
The comments were the first from the crushing and export body CIARA-CEC, which represents major grains firms in Argentina, including Cargill and Bunge (NYSE:), since the election of libertarian outsider Milei on Sunday. He takes office on Dec. 10.
Argentina is normally the world’s top exporter of processed soy and in the top three for corn. The South American country is also a major wheat and beef supplier.
“Today the grains trade is paralyzed by the grain shortage, the worst in 60 years, and by an expectation after Milei’s victory that there will soon be an adjustment to the official exchange rate,” Gustavo Idigoras, head of CIARA-CEC, said late Wednesday.
Argentina, battling triple-digit inflation and a sliding currency, has strict capital controls which have led to parallel exchange rates as high as 1,000 pesos per dollar, far away from the official one just over 350 peso. That hurts exporters who often have to bring most of their overseas sales back into the country at the official rate, getting fewer pesos for each dollar.
While the government has rolled out exchange rate sweeteners for farmers, giving them a better rate, many producers are waiting to see what Milei does when he takes office. He has pledged to scrap the currency controls and cut taxes.
Idigoras said the lack of beans for the huge crushing plants that turn soybeans into oil and meal along the Parana River meant the facilities were operating at greatly reduced capacity.
“Today we are at 73% average idle capacity in the crushing plants and 75% idle capacity in the grain ports,” he said. “We are going through the worst year and the worst quarter in history.”
He added that the crushing plants were bringing forward stoppages for technical maintenance due to the “impossibility” of being able to keep operating.
“Most of them are already activating these technical stops on many production lines. There will be very few active production lines left in the coming months,” he said.
Idigoras called on Milei’s government to quickly scrap trade restrictions on grains, including taxes, and access to foreign currency, and to lift export caps and red tape for import licenses.
“Milei’s government must be the government that has the greatest export focus in history, an aggressive export policy. For that they must first eliminate all restrictions on day one.”
