“Lean quarter”: they forecast USD 1,000 million less per month in grain exports due to lack of wheat

They assure that in the first months of 2023 the grain export movement will be complicated (Télam)

The drought that affects a large part of the countryside is beginning to show the first signs of the economic impact that the country will suffer during 2023 due to lower production. The rains of the last few weeks are bringing some relief to agriculture, but the first currency settlement results for January are worrying: according to the Chamber of the Oil Industry and the Center for Grain Exporters (Ciara-CEC), during the first month of the year the export sector entered USD 929 million, which implied a year-on-year decrease of 61% and 75% compared to last December.

Sergio Massa meets again with the Liaison Table, awaiting measures to deal with the drought

The meeting will be held tomorrow at 6:00 p.m. at the Palacio de Hacienda. The Minister of Economy had promised to make the official decisions known before February 1

In dialogue with Infobae, the president of the entity, Gustavo Idígoras, explained the factors of this poor income of dollars, which very possibly will continue like this during the first quarter of the year. “The liquidation has fallen and it was expected. This is caused by two variables: the first is the strong drought and in this sense January is the reflection of the loss of 10 million tons of wheat”, said Idígoras.

The leader estimated that of the 9 million tons that were initially expected to be exported during January, February and March, “surely a quarter of those shipments will materialize and that means USD 1,000 million per month that will not be made,” according to that we must add the missing early corn insurance that will be in March, which could exacerbate the fall.

Of the 9 million tons that were initially expected to be exported during January, February and March, “surely a quarter will materialize (Idígoras)

But Idígoras also affirms that the effects of the second edition of the “soybean dollar” have repercussions and will affect the level of foreign exchange earnings. “The producer anticipates sales for a better price knowing that later he will not have that and that happened with the sales of January, February and March. When the program (soybean dollar) was closed in December, I said that the stock for this campaign had run out, implying that in the first quarter we were going to have a low rate of sales from producers, an issue that is actually happening” , added the head of Ciara-CEC, who added the distorting effects on the corn market with a considerable decrease in the pace of sales.

Gustavo Idígoras, president of CIARA-CEC

For this reason, Idígoras affirmed that “it will be a lean quarter” in terms of exports and currency settlement, but it will also mean an increase in the costs of the industry and export logistics. “In these months there will be rescheduling of exports and that implies that the ports will increase their idle capacity. Thus, the margins of the industry are going to deepen their negative sign as the quarter progresses”, he pointed out.

Due to the effects of the drought, 100,000 fewer hectares of soybeans were planted

As reported by the Grain Exchange of Buenos Aires, the sowing of the oilseed was 16.2 million hectares, a 0.7% year-on-year drop. The advance of the campaign of the other summer crops

For the president of Ciara-Cec, “the only expectation we have is that the rainfall regime will normalize, that the performance of second-rate corn and soybeans will improve, and that we will have an improvement in the situation from May and June. However, we expect a year that will not have any kind of record and, although international prices are good, they cannot make up for the tremendous drop in production.”

As Idígoras said previously, the so-called “soybean dollar”, which during September and December meant the application of a differential exchange rate of $200 and $230 per dollar respectively for the soybean complex in order to encourage the liquidation of the oilseed stock and foreign exchange, was another of the causes of the poor income of dollars during January by the export sector, but it also works as a distorting element of the market.

Drought: recent rains improved the condition of late maize, but failed to stop the economic loss

The Rosario Stock Exchange projects that the average crop yield in the core zone will be 72 quintals per hectare, when in a rented field 84 quintals per hectare are needed to start earning money. The loss per hectare would be USD 190

“Today the market is abnormal due to the effect of the drought, but the soybean dollar also generated that. At this time the corn should flow and it is not, not only because of the lack of rain but because the producers have the financial capacity to stock it for what is obtained in that special regime”, at the same time that a “natural expectation” is generated in the producer that “the program be started again,” said Idígoras.

During 2022, the soybean complex twice agreed to a differential exchange rate established by the Government

This is why he maintains that “these windows, such as the soybean dollar, should not continue in the future, because they greatly alter market conditions, especially those grains that are not benefited. Today Argentina is becoming a kind of high season for soybeans and derivatives and the rest of the grains are disappearing. The soybean dollar was a necessity, but it should not be a routine and if it continues in the future, it would have to be thought that the entire cereal and oilseed complex should have a special condition for a certain time.”

Given the complex scenario posed by the drought, what happens in the markets will be central not only for the future of production, but also for the Argentine economy.

According to the analyst Carlos Etchepare, the international and local markets may go their separate ways “due to possible government intervention and the drought, which means that we have a much lower volume than expected, so exports are going to have less gravitation in the conformation of the price, with the exception of soybeans, which is dispatched abroad by 80 percent”.

There is a significant supply, with the large crop of soybeans and corn in Brazil being marketed and waiting for the US planting, which would have good weather (Etchepare)

With regard to the international market, Etchepare expects it to be “calm, with prices tending to fall.” Among the main reasons, it stands out that “there is a significant supply, with the large crop of soybeans and corn in Brazil being commercialized and waiting for the US planting, which would have good weather.”

“To this we must add the demand, which would be calm due to the world economic situation and, in the case of soybeans, because, although there is not much information about China, its economy is growing less and it is wanting to restructure its consumption levels. of the oilseed looking for replacements and alternatives so as not to depend so much on the world market. This may lead China to slow down its growth in the soybean market,” said the specialist.

The important supply of grains worldwide comes hand in hand with a large harvest of soybeans and corn in Brazil

For its part, Etchepare sees a “firm” local market, marked by the lower quantity of grains as a result of the drought, the possibility of merchandise retention by producers and greater government intervention within the framework of a election year, where the behavior of inflation can seal the fate of the ruling party.

“In an election year, we have to see how far the government’s intervention in corn and wheat deepens, which can distort everything and surely a new soybean dollar will also appear,” said the specialist. Likewise, he raised the possibility of a “very large” withholding process on the part of the producers, added to the fact that “there will be a shortage of merchandise, which means that, beyond the fact that there is a calm international market, at a There is going to be a very firm and solid market locally”.

Keep reading:

Fair Prices: the Government will control 49,000 products with more online tools and fewer inspections The BCRA sold another USD 56 million and so far this year it has recorded a negative balance of almost USD 300 million Insurance companies warned of the negative consequences of the lack of dollars

---

Source

---