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Argentine soy farmers who hoard stock to handle higher financing costs, central banks says

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Economy 4 hours ago (Sep 08, 2022 06: 30PM ET)

Argentine soy farmers who hoard stock to face higher financing costs, central banks says Reuters. A combine harvester can be used to harvest soybeans on a farmland in Chivilcoy, on the outskirts of Buenos Aires, Argentina April 8, 2020. REUTERS/Agustin Marcarian

By Maximilian Heath

BUENOS AIRES (Reuters) – Argentine soy farmers who store stock greater than 5% of these production will face an increased financing cost above the standard benchmark rate, the South American country’s central bank said on Thursday, section of a wider push to encourage sales.

The central bank said soy farmers over a particular size who hoarded their stock would face the very least financing rate “equal to 120% of the most recent Monetary Policy rate.”

Argentina’s benchmark interest stands at 69.5%.

Thursday’s announcement aims “to create credit more costly in order that it is far more convenient to market (soybeans) than to take credit,” a source acquainted with the problem explained.

The foundation added that now “the rate of any credit line will likely be more costly” for soybean producers, whose minimum rate would start at 83.4% beneath the new policy, the foundation said.

The move comes within an attempt by authorities to replenish dwindling forex 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 may be the world’s top exporter of processed soy oil and soymeal and the No. 3 for raw soybeans, but farmers have already been keeping stock as a hedge against inflation and potential devaluation of the neighborhood peso currency.

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