| BUENOS AIRES, Sept 27
BUENOS AIRES, Sept 27 Argentine farmers are
hoarding more soy this season than in past years, threatening to
reduce much-needed export tax revenue as raw beans become the
preferred unit of savings in an economy impaired by double-digit
The South American farming powerhouse is the world's No. 3
exporter of the oilseed at a time of increasing global demand.
Growers are stock-piling more and more soybeans on their
farms, selling only 70 percent so far this season versus about
85 percent at this point last year, said Leandro Pierbattisti,
an analyst with Argentina's grains warehousing chamber.
"They prefer to save by way of beans, which are synonymous
with protection from inflation," he said.
Market sources confirmed the trend. One Buenos Aires-based
grains trader, who asked not to be named, said Argentine growers
have sold 68 percent of their crop so far this year, while the
average rate of export sales is 78 percent for this period over
the last five years.
Independent agricultural economist Manuel Alvarado Ledesma
estimates farmers are holding onto 28 percent of their 2012/13
soy crop, or 17 million tonnes of soybeans worth $7 billion from
which the government could extract $2.4 billion in export taxes.
This is a problem for President Cristina Fernandez, as she
ramps up state spending ahead of an Oct. 27 mid-term election
that will determine the clout she has in Congress during her
remaining two years in office. Soybean export taxes are a key
revenue source for Argentina, which has been cut off from the
global bond market since its 2002 sovereign default.
Depriving the government of funds is no problem for growers
who have long opposed Fernandez's interventionist policies. They
complain about her lack of inflation targeting, the 35-percent
tax she put on soybeans and the export curbs she places on wheat
and corn to ensure ample domestic food supplies.
Fernandez was re-elected in 2011 on promises of increasing
the government's role in Latin America's No. 3 economy.
Her policies include heavy foreign exchange controls meant
to limit access to dollars and stanch capital flight. She is
criticized by orthodox economists for the passive approach she
has taken toward inflation clocked by private economists at 25
percent per year, one of the highest rates in the world.
Santiago del Solar, who farms soy in Argentina's
bread-basket province Buenos Aires, said farmers are retaining
more beans this year than last due to financial uncertainty.
BIG U.S. CROP SEEN
The United States is forecast to produce 85.71 million
tonnes of soybeans this year, the country's fourth biggest crop
ever, according to the U.S. Department of Agriculture (USDA).
That estimate might go down next month when the U.S. harvest
starts in earnest and the full effects of dry Midwest August
weather are factored in. The U.S. crop will certainly be a
robust one that keeps downward pressure on world soy prices.
"The market might be bearish over the midterm, depending on
Brazil and U.S. crop forecasts, but people don't care. To an
Argentine farmer beans represent dollars, which hedge against
the biggest risk they face: inflation," Pierbattisti said.
Chicago soy futures prices are down about 7 percent so far
this year. But its not just the sale of beans that is in play.
Argentina is also the world's top exporter of soyoil, used
in the booming international biofuels sector, and soymeal
livestock feed used widely in China.
CRUSHING LESS SOY
"So far the lack of selling by farmers has not impacted
Argentine soy exports. The real impact is on domestic crushing
operations," Pierbattisti said, citing data showing exports of
2012/13 soybeans at 6.2 million tonnes versus 4.4 million tonnes
at this time in the previous season.
In the first seven months of this year, Argentina crushed
19.7 million tonnes of soybeans, down from 20.8 million in the
same 2012 period, according to Andres Alcaraz, spokesman for
Argentina's CIARA-CEC crushing and export industry chamber.
"Idle capacity is twice that needed to avoid an increase in
fixed costs. This is not good for the competitiveness of
Argentina's export industry," he said.
As Argentina expands its crushing industry in anticipation
of a jump in world food demand - the United Nations sees demand
doubling by 2050 - idle capacity of soyoil and meal crushing
plants is at 30 percent this year, below the 34 percent at this
time last year when drought reduced Argentina's soybean crop.
Idle crushing capacity is also being pressured higher, along
with soybean exports, by the strategic decision China has made
to import more raw beans to be crushed on Chinese soil.
The USDA says Argentina produced 49.4 million tonnes of soy
in the recently-harvested 2012/13 season, and has forecast
output of 53.5 million tonnes in the 2013/14 crop year, which
will start being seeded next month.