argentine farmers refusing to sell their soybean stash

[Hopperbin]

If it quacks like a duck, they say, it might just be a duck. And the Argentine government's latest move to cut the availability of operating loans to the country's soybean producers sure looks like another effort to get them to sell some of the 2013-14 product they've got stashed in storage.This week's effort to make Argentine producers cut loose of at least enough beans to cover cropping costs comes after such loans through the national bank had already been cut by 10% to 20% last December.Apparently, that wasn't enough, though.So why is Buenos Aires so eager to pry open the locks on Argentine producers' bins? Because heavy export taxes on the bean complex go to pay for local infrastructure improvements and pensions. The government, which just went through a default on its international loan obligations, needs that cash.Argentina government gets 35% export tax on overseas soybean salesBut it really isn't those whopping 35% export taxes on beans and products, though, that is keeping producers from letting loose of some old product. It's the exchange rate. Bean prices have already fallen, and, to make it worse, farmers have to sell their crop using the ludicrous official exchange rate of just 8.49:1 (the black market rate, uncontrolled by the government, is more like 14.40:1.)Related: The Strange World of Argentine Ag PolicyThey're waiting for another peso devaluation that might allow them to make at least some kind of profit on bean sales.Buenos Aires has reportedly told bank branch managers in the Pampas region, according to a news report, to drag their feet processing soybean cropping loans for at least 15 days.An Argentine bean farmer quoted in a local publication characterized the move as "extortion." Now, I'm sure Argentine President Cristina Fernandez de Kirchner would never use such a term to describe a government simply trying to get its 35% export taxes, plus the big spread between the official and real exchange rates. But, hey, if it quacks like a duck...The opinions of James Thompson are not necessarily those of Farm Futures or the Penton Farm Progress Group.

[Hopperbin]

In usa

A rally of almost $1.50 a bushel is nothing to sneeze at, and farmers are rewarding the market's efforts by moving more soybeans to town, weakening basis at many locations. Despite record soybean exports, bids are even easing from the Gulf up the river system, an indication this rally may be more about the need for end users to cover short-term risk rather than a sign of actual shortages of soybeans.Weak basis, even at processors, suggests plants aren't having trouble convincing farmers to sell. But those relying on railroads to bring stocks in or ship meal out are having trouble meeting commitments, in a rally fueled by strong buying in products.Meal stocks were tight due to historically scarce 2013 crop soybeans this fall, even before harvest delays caused another setback for processors. Record levels of soybean meal exports also had end users scrambling to compete for supplies, with much-needed inventory sitting on rail cars due to longer turnaround times. End users bought futures contracts for soybeans and meal to cover their risk of increased costs, which in turn triggered short covering by big speculators, who had places bearish bets and were caught leaning in the wrong direction.Basis fell well below option along the Illinois River, where deliveries against futures focus. However, no stocks are registered ahead of first notice day on Friday, even though warehouses took in more stocks along the river last week that doubled their inventory.While bean basis was fading, bids strengthened for corn, despite its own rally on the board. Harvest is still behind normal though it's passed the halfway point, and very weak basis was a disincentive for growers to part with their supplies, forcing end users to bid up cash prices some. December-July carry even tightened a couple cents, though it's still running almost 4 cents a month.High harvest-time freight costs should come down substantially over the fall and winter, helping strengthen basis into spring and summer. Freight costs for May/June along the Illinois River are a whopping 60 cents cheaper than the spot market this week. This continues to suggest growers wanting to take advantage of the rally lock in prices with futures or hedge-to-arrive contracts while waiting for basis to strengthen.High rail freight weakened corn bids off the PNW, but basis in the export pipeline for wheat mostly strengthened this week, even off the West Coast. Bids along parts of the Ohio River for soft red winter wheat really popped, a sign that grain is in really tight hands of commercials after farmers sold to make room for big corn and soybean crops. Wheat basis should strength into December for all classes, with carry in Chicago and Minneapolis making further storage hedges late winter and spring attractive

[Hopperbin]

Dalian 11 year soybean chart if means anything.


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