“The grain farmers are in a better situation than what was expected…”
Lorena D’angelo is a market analyst and commercial consultant, graduated in accounting from PUC, master in finance from Universidad del CEMA.
Lorena D’angelo, market analyst
AgriBrasilis – Is the current scenario favorable for grain farmers in Argentina?
Lorena D’angelo – The grain farmers are in a better situation than what was expected, as they are harvesting more than what was initially estimated when the dry weather was harming the productive potential of crops. However, the drop in product prices is adjusting the profit margins for grain farming, since the prices received by farmers are below international values due to export taxes charged by the government.
Furthermore, it is important to notice that there are some farmers who, despite the improvement in soybean productivity, had their two previous harvests affected by the bad weather.
AgriBrasilis – How are the exchange rate changes affecting agriculture in the country?
Lorena D’angelo – Following the Argentine government’s decision to lift foreign exchange restrictions on some areas, the sector relies on a single exchange rate to sell its harvest. Some choose to sell and receive in US dollars and others in Argentine pesos, but ultimately everyone is paid in Argentine pesos.
Currency unification forces the sector to operate with a single exchange rate, currently very similar to the previous one, due to the so-called “mix” (composed of 80% in the official exchange rate and 20% of the CCL, the dollar “contado con liquidación”), but with lower prices in dollars.
The measure adopted by the government is favorable for the entire sector, but it still needs to adjust to exchange rate volatility, which operates according to the supply and demand of dollars in the market.
AgriBrasilis – How have soybean sales performed in recent months?
Lorena D’angelo – Sales by Argentine farmers were below the averages of other years in the same period. Uncertainty about the evolution of the exchange rate, low prices and export taxes led to the forecast of low turnover.
However, with the currency unification and the progress of the soybean harvest, farmers began to sell and, in recent days, the sales volume has accelerated, although the accumulated volume is 9.5% lower than in the same period last year.
AgriBrasilis – How is port congestion impacting grain prices?
Lorena D’angelo – The increase in business, as well as the progress of the harvest, which had been delayed by rainy weather, boosted the flow of goods to port terminals and oilseed processing plants.
Approximately 5,000 trucks arrive daily at the Up-River ports, which stretch from the city of Timbúes in the North to Villa Constitución in the South.
Based on these records, common at this time of year, we observed problems in unloading at the destinations with the highest demand, causing a large volume of the harvest to be retained in the fields in silos or sent to warehouses.
AgriBrasilis – Are the new agreements with the IMF positive for agriculture?
Lorena D’angelo – The government’s agreement with the IMF is good news for the country, given the inflow of dollars that allows for an increase in reserves and perhaps alleviates some of the pressure on the sector to sell production to liquidate foreign currency.
Likewise, given the Central Bank’s balance sheet, the need to liquidate the agro-export sector continues to be necessary, and in fact an increase has been observed in recent months due to the arrival of the grain harvest.
AgriBrasilis – What is the current outlook for the retenciones (export taxes) policy?
Lorena D’angelo – On January 25, the government issued a decree temporarily reducing export taxes on agricultural products until June 30. In the case of cereals, they went from 12% to 9.5%, while soybeans went from 33% to 26% and by-products from 31% to 24.5%.
Recent statements by the President of the Nation and the Minister of Economy indicate that the decree will expire on the established date and, as of July 1, the previous rates will be resumed.
Based on these definitions, many farmers, especially soybean farmers, have been making deals to capture the best prices and apply them to financial needs, purchase inputs for the next business cycle or simply invest in other assets.
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