It is estimated that Argentine farmers are holding on to 8.4 million tons of soybeans as compared to 1.6 million tons this same time last year and crushing facilities in the country are working at 60% capacity because of a lack of raw beans. Argentina is the world’s top exporter of soymeal and soyoil and the third biggest supplier of soybeans. However the lack of confidence in the country’s economy has caused farmers to hold back their beans to avoid inflation as soybeans are more stable and worth more than the country’s peso. Farmers in Argentina are paid in pesos but under the country’s foreign exchange laws they are not allowed to covert those pesos into U.S. dollars. Argentina’s black market peso has weakened 37% over the past year to 11.85 per U.S. dollar – 72% weaker than the official exchange rate. Argentina’s policy of a 35% export tax on soybeans, the nationalization of the country’s main energy company, YPF, soaring inflation of 10.9% in 2013, and an average consumer price increase of 25% in 2013 have all contributed to weakening the country’s economy (Latin America’s third largest) and the loss of confidence by investors and industry. Farmers are using soybeans as currency for the purchase of everything from seeds to vehicles with a four wheel drive vehicle costing approximately 130 tons of soybeans.
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