Dollar-strapped Argentina eyes help from record grain exports

Bumper harvests of wheat and barley in Argentina and high prices are set to give the government some breathing room with the peso, which it’s widely expected to devalue.

Farmers on the Pampas growing belt recently started collecting the grains, and by the time they’ve finished fieldwork in early January exports are forecast to be worth $4.9 billion, according to the Buenos Aires Grain Exchange. That’s 16% more than in the previous season and a record for the six years that the bourse has been tracking shipments, said chief economist Agustin Tejeda.

While the value of wheat and barley exports pales in comparison to soybeans and corn harvested in the second quarter, the timing of the dollar inflows is crucial, helping the central bank to manage the peso over the southern-hemisphere summer. Crop traders receive dollars from foreign buyers, which must then be swapped into pesos through the central bank.

Argentina always craves supplies of hard currency, and it already controls the peso tightly to keep dollars from flowing out. But the government is particularly needy right now, with large debt payments to multilateral lenders coming up, inflation running at more than 50%, and net foreign reserves estimated to be just $3.4 billion, according to Buenos Aires consulting firm Anker Latinoamerica. 

The wheat crop—exports of which would account for 83% of the $4.9 billion windfall—remains on course for a record 19.8 million metric tons, but yields may fall after plants suffered from heat waves, the grain exchange said in a Nov. 18 report.