Argentine soy farmers who hoard stock to face higher financing costs, central banks says
Reuters
Published Sep 08, 2022 06:25PM ET
By Maximilian Heath
BUENOS AIRES (Reuters) - Argentine soy farmers who hold onto stock of more than 5% of their production will face an elevated financing cost above the normal benchmark rate, the South American country's central bank said on Thursday, part of a wider push to encourage sales.
The central bank said soy farmers over a certain size who hoarded their stock would face a minimum financing rate "equivalent to 120% of the latest Monetary Policy rate."
Argentina's benchmark interest rate stands at 69.5%.
Thursday's announcement aims "to make credit more expensive so that it is more convenient to sell (soybeans) than to take credit," a source familiar with the matter explained.
The source added that now "the rate of any line of credit is going to be more expensive" for soybean producers, whose minimum rate would start at 83.4% under the new policy, the source said.
The move comes as part of an effort by authorities to replenish dwindling foreign currency reserves by pressuring soybean farmers to export more.
On Sunday, Economy Minister Sergio Massa set a preferential exchange rate for soybean producers, sending soybean exports surging earlier this week.
Argentina is the world's top exporter of processed soy oil and soymeal and the No. 3 for raw soybeans, but farmers have been holding onto stock as a hedge against inflation and potential devaluation of the local peso currency.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.