Argentina grain sales rise after lifting currency controls

Argentine grain sales have picked up again after falling last month due to the lifting of currency controls, the Rosario Grain Exchange said in a report on Friday.

Argentina relaxed its currency controls in mid-April, opening up a range of alternative exchange rates, including in agricultural markets.

The move was welcomed by the grain industry, but sales were initially slow as exporters were uncertain about the exchange rate and the soybean harvest was behind schedule.

However, the exchange report showed that there has been an uptick in recent weeks, with exporters transacting 11.6 million tonnes of grain worth $3.86 billion.

Locally, farmers sold 8.8 million tonnes of grain, more than half of which was soybeans.

The gap between the official peso-dollar exchange rate and grain prices has also narrowed since mid-April, the exchange said.

The gap used to be close to 30%, but has since averaged just 3%, the exchange said.

“As the gap narrows, distortions between the dollars received per tonne on the local market are eliminated, especially on the supply side,” the exchange said.

Agricultural markets are an important source of foreign exchange for Argentina, which needs reserves as the government tries to stabilize its long-slumping economy.

President Javier Milei’s administration has cut export duties on agricultural shipments in an attempt to speed up sales, although the measure is set to expire at the end of June.

“This window creates additional incentive for the sector to begin sales and settle exports before that date,” the exchange said in a separate report on Friday.

The exchange estimates that grain shipments are expected to total $18.2 billion in the first half of the year, up 26% from the first half of 2024. In the second half of the year, shipments will fall to $13.4 billion if the tax breaks are not extended.