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Argentina launches new exchange rate to increase exports, farmer sales

Highlights

New foreign exchange rate to be valid until Sept. 30

Exporters allowed to liquidate at 200 pesos per 1 US dollar

The Argentinian government has set a new foreign exchange rate for soybean complex exporters that aims to stimulate shipments, raise the central bank's reserves and boost farmer sales.

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Valid Sept. 5-30, the scheme allows local exporters to liquidate their sales at a rate of 200 Argentinian pesos per 1 US dollar, more than 40% above the current official rate. It also replaces a previous temporary exchange rate that expired Aug. 31 without heating up farmer selling.

"We have signed a liquidation commitment with the main agro-export companies, which foresees $5 billion for this month, of which $1 billion will be in the first 72 hours," Argentina's economy minister, Sergio Massa, said on his Twitter account.

"The agro-industrial sector is key. It represents one of the most important economic engines in Argentina, and that is why this measure seeks to benefit and recognize the work and effort of this sector."

Argentina is the world's largest exporter of soybean meal and oil, but it has faced low crushing rates this year amid export taxes of 33% on raw soybeans and meal and oil, with a subsequent impact on the pace of farmer sales.

As of Aug. 24, Argentinian farmers had negotiated 22.70 million mt of soybeans for the current 2021-22 marketing year (April-March), from more than 28 million mt by this time in the prior season, according to the latest official data.

From January to July, 23.56 million mt of soybeans were crushed by local plants, a 9.2% drop from the same period in 2021, with monthly volumes falling since May, according to official Argentinian data. For August, crushing of only around 2 million mt was expected, a broker has said.

"We see this new condition as a significant improvement, albeit temporary, and that it will have a direct impact on the price of soybeans in the domestic market," Gustavo Idigoras, head of the Argentinian chambers of grains exporters and processors, or CIARA-CEC, said in a statement.

Idigoras noted that the decision on either selling soybeans or not is still up to Argentinian farmers.