Argentine soybean farmers are registering their lack of faith in the country's peso currency by hoarding beans even as the local futures market shows a clear drop in the price of the oilseed for delivery in the months ahead.

Argentina is the world's top exporter of soymeal and soyoil as well as its third biggest soybean and corn supplier at a time of booming international food demand. But for local farmers, a bean in the bag is better than a peso in the bank, as confidence declines in Latin America's No. 3 economy.

President Cristina Fernandez's policies, from harsh currency controls to heavy stimulus spending unencumbered by inflation targeting, has made Argentina a no-go zone for all but the most risk-hungry investors.

The spot price of soy in grains hub Rosario is $325 per tonne, way above the $288 for beans to be delivered in May.

Growers are nonetheless hoarding their stocks because, as low as prices may go this year due to heavy global supply, to sell would expose them to a currency ground down by high inflation, falling central bank reserves, and a lack of investor confidence.

"Normally, you would want to sell now at $325," said Leandro Pierbattisti, an analyst with Argentina's grains warehousing chamber. "But the market in Argentina is not normal because of the devaluation of the peso."

Argentina's black market peso has weakened 37 percent over the last year to 11.85 per U.S. dollar at the end of trade on Tuesday, 72 percent weaker than the official exchange rate.

The Fernandez administration has cracked down on access to U.S. dollars, forcing farmers to save in anemic pesos. This has all but dried up the local soybean market in recent weeks.

Pierbattisti estimates that Argentine farmers are holding onto about 8.4 million tonnes of soybeans, up from an estimated 1.6 million at this point last year.

Local factories that crush soybeans into meal and oil, used as livestock feed and in making biofuels, are working at 60 percent capacity, down from 65 percent a year ago, due to lower supply of raw beans as farmers hoard crops, Pierbattisti said.

"Farmers are not selling a single kilo of anything," said a Buenos Aires-based grains trader who asked not to be named. "There is no real commerce."

Growers are paid for their grains in pesos, which they are not allowed to swap for dollars under Argentina's foreign exchange rules. Lack of access to a stable currency has encouraged growers to pile beans into oblong white plastic bags that have come to dot the Pampas grains belt, each horizontal silo representing a makeshift unit of savings.

Export companies that sell Argentine soybeans overseas are paid in U.S. dollars. But they are required by Argentina to repatriate the greenbacks to be swapped for pesos at the official exchange rate.

Trucks For Raw Beans

This season's U.S. soybean harvest may be one of the largest ever at 89.5 million tonnes. So the world is likely to be awash in soy by the time South American growers start bringing in their crops next month.

Big harvests are expected in Brazil (89.0 million tonnes), Argentina (54.5 million) and Paraguay (9.4 million), according to estimates by the U.S. Departtment of Agriculture and private analysts. Demand is driven by China, where soymeal is needed to fatten up cattle served as beef steak to increasingly discerning middle class diners.

Argentina's interventionist policies, including a 35 percent export tax on soybeans and the 2012 nationalization of the country's main energy company, YPF, have joined with high inflation to scare off investment needed to take advantage of growing world food demand.

Private economists, rejecting official government data as lacking credibility, say consumer prices rose by more than 25 percent last year, one of the world's highest rates. The government said full-year 2013 inflation was 10.9 percent.

Consumer prices will rise about 30 percent in 2014, according to a Reuters poll of analysts last week. That would be the highest rate since 2002 when millions of middle class Argentines were pushed into poverty by a crisis punctuated by a sovereign bond default and 41 percent inflation.

"We feel safer holding onto our crops than we would holding the peso," said Santiago del Solar, who manages thousands of hectares in western Buenos Aires province. "That's not going to change as long as confidence remains so low, or until there is a change in policy that would allow us to save in dollars."

With two years to go before the end of her second term, Fernandez has shown no sign of making major policy changes.

Buenos Aires farmer Alvaro Tomas says he and his neighbors are meanwhile using raw beans to buy everything from pickup trucks to seeds. A good four-wheel-drive vehicle, for example, would cost you about 130 tonnes of beans.

"Any grower who has the alternative to save in soybeans is doing so because it the only way to protect yourself from inflation," Tomas said. "I don't know anyone who can save in any other way."