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UPDATE 1-Argentina's soy planters betting the farm on trade war outcome

Maximilian Heath

(Adds context on growing importance for Argentina of soybean exports)

BUENOS AIRES, May 30 (Reuters) - Faced with a plunge in prices for their crops sparked by the U.S.-China trade war, Argentine soy farmers have had little choice this year but to take the losses or hold onto their stocks in a bet on an eventual truce.

The local Rosario grains exchange estimates that despite a bumper harvest, the fall in soybean prices - at a decade low earlier this month - will knock $1.4 billion off the country's expected soybean-related income this season.

Argentina, one of the world's top soy exporters, is in the middle of its soybean harvest, with exports of the oilseed key to helping the country climb out of a deep recession and bolster President Mauricio Macri ahead of national elections in October.

Sale prices for soy at the Rosario grains hub are now at $230 per tonne, down from around $280 in the middle of last year when farmers were starting to make plans for planting, according to prices on the Buenos Aires Futures and Options Exchange. They have bounced from a decade low of under $210 earlier in May.

"The impact of falling prices is huge," Lucas Elizalde, a farmer from the northern province of Salta, told Reuters, adding that lower margins were sapping much of farmers' profits.

Elizalde is one of the luckier ones. He sold 60% of his soybean crop on the futures market at as much as $300 per tonne before the price dropped.

"We got a good average sale price, but today I feel like 'dang, why did I not sell more?"'

Others have been holding onto their soy - with 60 percent remaining unsold as of May 22, official data show, compared to 47 percent at the same time a year earlier.

Juan Minvielle, a producer from the north of Buenos Aires province, has seen his trade war bet backfire, despite good weather in the region and decent soybean yields. He had hoarded his soybeans, awaiting for a rebound in prices.

"Since the (earlier) corn harvest I've been living off that, but I don't have much left," said Minvielle.

"So now I'm starting to sell some soybeans, though trying to hold off for as long as I can."

CHINA PULL-BACK

The price has been hit by an oversupply of soy in the United States due to the U.S.-China trade war, with Beijing hitting U.S. soybeans with steep tariffs. That has caused a glut of beans that would previously have traveled east.

China's culling of soy meal-fed hog herds due to swine flu has dampened prices, too.

"There's been a strong pull-back in demand from the main global buyer of soybeans (China), which is creating an over-sold market," Agustín Tejeda, chief economic analyst at the Buenos Aires grain exchange, said in an interview.

South America's second largest economy - which normally processes most of its own soy - has grown more reliant on exports of unprocessed beans as rival soy crushers in the United States have stolen market share.

The country's crushing plants have seen capacity drop sharply as the trade war has rerouted U.S. soy meal to traditional buyers of its products like Vietnam and Indonesia, while local tax policies have raised levies on exports of processed soy.

Argentina is still set for a major harvest in terms of volume after a drought last year hammered the crop. The Rosario exchange estimates the soybean harvest will hit 57 million tonnes, the third largest in the history of Argentina, the world's leading exporter of processed soy oil and meal.

The rise in revenues derived from soy products will be muted, however, due to the lower prices.

Arnaldo Rearte, a farmer in the northeastern province of Chaco, said the weak prices had been brutal, compounding flooding which had hit the remote region during the harvest.

"We hope that the global conflict between the big shots won't cause us another fall next season," Rearte said.

(Reporting by Maximilian Heath; Editing by Adam Jourdan and Rosalba O'Brien)