BUENOS AIRES - The currency devaluation set to kick off in Argentina on Thursday is expected to pump millions of tons of pent up soybean supply into the international market at a time when the world is already seeing record stockpiles.
Starting on Thursday Argentines will have full access to U.S. dollars. The exchange rate will be allowed to float after years of strict central bank control, prompting what is expected to be a 30 percent devaluation of the peso.
This would make exporting more profitable for farmers, who get paid for their grains in dollars.
Mauricio Macri was inaugurated last week promising to revitalize the Pampas farm belt with free market policies. His grains production push is happening as global stocks of corn, soybeans and wheat are already projected by the U.S. Department of Agriculture to be the highest ever this season.
"Growers were sitting on close to 13 million tons of soybeans, waiting for this devaluation," said Ernesto Ambrosetti, chief economist at the SRA, Argentine Rural Society, which represents the country's biggest farms.
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"We expect those 13 million tons to be sold between now and the next harvest in April and May," Ambrosetti said.
Macri also eliminated corn and wheat export taxes and says he will ditch corn and wheat export curbs. Previous President Cristina Fernandez said the export curbs ensured ample domestic food supplies. Farmers complained the policy killed profits.
The new wheat and corn policies are expected to induce wider planting next year, increasing crop rotation after years of over planting soybeans.
This season's corn is nearly all planted. Wheat goes into the ground in May-July. Argentina has exported about 4.5 million tons of 2015/16 wheat. That figure is expected by local analysts to zoom to 7.4 million tons next season.
Argentina, the world's No. 3 soybean exporter and top supplier of soymeal livestock feed, is also out to reclaim its place as a top supplier of beef under Macri. He has eliminated the 15 percent tax that had been put on beef exports.
Fernandez had feuded with the country's growers since protests over her tax policies paralyzed the agriculture sector and rocked her government in 2008.
The government estimates the country's grains production will grow to 130 million tons per year during Macri's first term, ending in 2019, up from the current 100 million tons.
