The rise in the “blue dollar,” the parallel market exchange in Argentina, means that the preferential exchange rate plan implemented by the Argentinian government is unlikely to meet targeted volumes and revenues by the close of May when it is set to end, Javier Preciado Patiño, analyst and former Undersecretary of Agricultural Markets at Argentina’s Ministry of Agriculture, MAGyP, told Fastmarkets Agriculture.
In the agri dollar plan, also known as soy dollar 3, the country has been aiming to stimulate soybean, byproducts and other exports to increase the inflow of US currency.
Before the program started on April 10, the Argentinian government expected sales of 7 million-10 million tonnes and revenues of around $6 billion.
But in April, export license applications for soybeans, soy oil and soy meal totaled 1.1 million tonnes, MAGyP data analyzed by the Rosario Grains Exchange showed.
The first time the soy dollar plan was implemented, in September 2022, registered export licenses totaled 13 million tonnes. The second time the plan was implemented, in December last year, they amounted to 4.1 million tonnes.
Since the beginning of soy dollar 3, Argentinian farmers sold or priced 2.3 million tonnes of soybeans and byproducts in the domestic market. In the same period, under soy dollar one, 11.3 million tonnes were traded, and under soy dollar two, 5.3 million tonnes were traded.
“The combination of the devaluation of the Argentine peso and the blue dollar increase, with the weakness of the soybean price in the local market, makes it very difficult to achieve the objectives initially set,” Patiño told us.
With the parallel dollar above the soy dollar, fixed at 300 pesos per dollar, producers are not compelled to sell.
The blue dollar ended Tuesday, May 2 at 475 pesos per dollar; it reached 495 pesos per dollar on April 25.
“As we are in a currency instability, producers are waiting for a little more stability to sell, as the difference between dollar agri and blue dollar discourages business,” Patiño said.
When the agri dollar was announced on April 5, the official dollar was at 211 pesos, and the blue dollar was trading at 392 pesos.
The 300-pesos-per-dollar rate set by the plan would allow producers to sell their products at a 42% increase from the official exchange rate, which was 23% lower than the parallel exchange rate, data from Patiño showed.
But on April 28, the official dollar was at 222 pesos and the blue dollar at 469 pesos, meaning the agri dollar was 35% above the official rate and 36% below the blue dollar.
Introduction of new products
Last week, the Argentinian government included new products — such as barley, sunflower and sorghum — in the dollar agri plan to increase sales.
Argentinian farmers sold or priced 262,311 tonnes of sunflower and byproducts in April under the new plan, while barley totaled 215.079 tonnes and sorghum 7,447 tonnes.
However, Patiño believes low availability, along with the dollar exchange rate, might make those products follow the same path as soybeans.
“The volumes available for export are much less than the soybean volumes, and I believe they could bring in around $1.4-1.5 million in revenues, but some sources indicate that it would be half of that — around $700 million,” he said.
Patiño said the scenario could change if the government adjusted the preferential exchange to reduce the gap from the dollar blue or extended the program at a higher exchange rate.
Another alternative would be to offer more attractive prices for producers to induce farmer selling.
“Producers know that they have an advantage, because the government needs dollars and that, if there was a soy dollar 3, why not a soy dollar 4?” Patiño said.
