Argentina farmers focus on harvest over sales despite currency boost

BUENOS AIRES (Reuters) - Argentina's grain industry welcomed an exchange-rate overhaul on Monday, though the new measures will likely not translate into immediate sales as the harvest remains behind schedule, experts said.

Late on Friday, Argentina's central bank loosened foreign-exchange controls, a long-awaited measure twinned with billions of dollars to be disbursed by development banks including the International Monetary Fund.

Lifting of the controls is also meant to speed up agricultural sales, a prime source of cash from abroad.

Despite that, soy and corn sales should remain slow this week, with Easter holidays cutting trading short and exporters still unsure of where the peso currency will settle. The soybean harvest has also fallen behind due to heavy rainfall.

"Producers are more focused on harvesting than on the exchange rate, which they already know will be above Friday's 1,129 pesos per dollar," said analyst Lorena D'Angelo, based in grains hub Rosario.

With the capital controls lifted on Monday, the peso was allowed to float freely within a moving band between 1,000 and 1,400 pesos per dollar. By midday, it was trading around 1,190 pesos per greenback. 

Farmers are now rushing to bring in the soy crop amid a break in rains. More precipitation could cause fungus and infection, hitting the harvest's yield.

"We're harvesting as much as we can," said Noelia Castagnini, a farmer near Venado Tuerto in grain province Santa Fe. "Right now, all my machines are covered in mud, but we'll worry about the fields later."

President Javier Milei, in an interview on Monday with local radio El Observador, pushed for farmers to speed up their sales.

"Tell the farmers that if they need to sell, they need to do it now," he said.

Argentina currently taxes soy exports at 26% and shipments of derived oil and meal at 24.5%. Milei hinted that a temporary tax break, set to expire at the end of June, would not be extended.

WAIT AND SEE

"We'll have to wait today and maybe tomorrow to see where the market settles," said Federico Zerboni, head of corn association MAIZAR, when asked if the weakened peso would further slow grains sales. "Today, it's hard to evaluate the new measures without that information."

Grain prices were not available by midday, D'Angelo said.

"The government clearly made a positive, favorable decision to normalize the foreign-exchange market," said Gustavo Idigoras, head of the grains export and processing chamber. "In any case, the harvest is delayed, so we're not expecting a quick market reaction."

Grain sales as of April 2 were at their slowest rate in the last decade, data from the Agricultural Ministry showed.

(Reporting by Maximilian Heath; Writing by Kylie Madry; Editing by Rod Nickel)