Argentine farmers' reluctance to sell soybeans, blamed for paralysing trading on the Rosario grains exchange, looks set to continue, thanks to the continuing decline in the peso - and to the spread of silo bags.
Growers in Argentina, the third-ranked producer of the oilseed, are sitting on 11.5m tonnes of soybeans, according to newspaper Cronista Commercial - equivalent to more than 20% of the latest harvest and more than the country usually exports - viewing the crop as a hedge against rising inflation and a falling currency.
The peso this week fell below $0.16, a drop of 22% year on year, and down by nearly one-half over the last five years.
Crops, being dollar denominated, offer growers protection against currency decline, prompting the withholding, and lack of offers, which has been blamed for five successive days without soybean trading on the Rosario grains exchange, the country's main ags market.
"Farmers refused to sell their beans in light of the unstable domestic currency," Vanessa Tan at broker Phillip Futures said.
At the Rosario exchange, a spokesperson told Agrimoney.com that ideas that the weakening currency was to blame was a "fairly accurate opinion.
"Very little is being transacted, and one of the reasons is that the dollar goes up day by day, so sellers prefer to wait a bit to get more value in peso terms," the spokesperson said.
The extent of the withholding has raised concerns that global soybean markets could face a flood of Argentine supplies as the country's next harvest approaches, and farmers sell up to make room for the new crop.
However, that looks unlikely given the extensive use of silo bags, large storage sacks, which can store crops for some 18 months, leaving farmers a further nine months or so before they need to sell for fear of quality deterioration, said respected crop scout Michael Cordonnier.
"The fear of inflation is much higher than the fear of losses to deterioration," Dr Cordonnier, at Soybean and Corn Advisor, told Agrimoney.com.
"Sure, you might suffer some discount from deterioration in quality, but the risk of loss is far greater from a declining currency.
"If those were my soybeans, I would not sell," unless the government devalued the currency, "when I would sell the next day".
The comments came despite a forecast by Dr Cordonnier, who while based in the US has close connections with South America, that Argentina will harvest a record 56m tonnes of soybeans this year, a figure higher than the 54.5m tonnes at which the US Department of Agriculture pegs the crop.
However, he was more downbeat that the USDA on expectations for Argentina's corn crop, which is forecasts at 24m tonnes, down some 10% year on year, citing the impact of dryness in slowing plantings, and encouraging growers to switch to soybeans instead.
"Sowing of more than half the corn crop was delayed into the month of December, the most corn ever planted that late," he said.
While late planting need not mean a weak harvest, as the US proved this year, "the weather is becoming more troubled going forward", with ideas of dryness in some areas.
Weather service MDA said in a long-range forecast that "some heat may become an issue in north western Argentina in January", although drier weather in other parts would counter excessive wetness of late.