October 9, 2014

Argentine farmers and exporters have been hoarding approximately 25 million tons of harvested soybeans until low global prices recover and as a hedge against the country’s plunging currency amid soaring inflation and economic difficulties.  However, the country’s Cabinet chief has stated that the government will take all measures necessary to force producers and exporters to sell their stockpiles in order to gain much needed tax revenues, having been barred from global credit markets in 2002 after that year’s default.   In fear that the country’s second default in July resulting from its inability to meet a sovereign bond payment will trigger a balance of payments crisis,  a law was passed last month allowing the government greater control of companies pricing and sales volumes however, sales volume minimums have not been agreed upon after government meetings with exporters.   Argentina’s foreign reserves have fallen to an eight-year low as the country faces a doubling of its cost of debt servicing in 2015.  In reaction, the government is seeking greater control of agricultural trade in order to obtain dollars but such moves are weakening business confidence.

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