Argentine Devaluation to Get $2.4 Billion From Crops by Year-End

  • Peso plunge prompts exports of hoarded soybeans, corn
  • Shipments on pace for $400 million a day under new accord

Grain exports from Argentina, the world’s third-largest shipper of corn and soybeans, will add $2.4 billion to the country’s foreign reserves by year-end after the new administration allowed the biggest one-day peso devaluation in the last 14 years Thursday.

Argentina’s peso tumbled as much as 30 percent on Thursday as newly inaugurated President Mauricio Macri fulfilled his campaign promise of letting the currency float freely. Finance Minister Alfonso Prat-Gay announced the lifting of four years of currency controls Wednesday saying that the government had reached a deal with exporters who pledged to export $400 million a day for a total of $6 billion over three weeks.

"Grain exporters couldn’t sell all the dollars they pledged as there were no buyers in the market," Prat Gay told reporters at the presidential house. "They sold $20 million and the market traded $45 million on an abnormal day without a futures market."

As of Thursday, Argentina had shipped $18 billion of grains and oilseed abroad this year, the lowest for the period since 2009, according to the exporters’ group data. The organization predicts exports will rise to $20.4 billion by year-end. The three-week period will carry over into the first week of January because the next two weeks are cut short by four Argentine Yuletide holidays.

Argentine farmers sold $437 million for exports in the last month, the group’s figures show.

On Monday, Macri announced the elimination of export taxes on crops, including corn and wheat, carrying through on a campaign pledge. The soybean tariff was cut by 5 percentage points. Argentine farmers were storing an estimated $11.4 billion of soybeans, corn and wheat to protest export taxes and the difficulty in obtaining export permits. They also were expecting the currency to be devalued.

Argentina expects its reserve to see an inflow of $15 billion to $25 billion over the next month. In addition to the accord with grain exporters, the central bank will convert the equivalent of $3.1 billion of yuan obtained in a currency swap with China into U.S. dollars to boost liquidity in reserves and is negotiating as much as $10 billion in loans from Wall Street banks.

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