Producers see investment in machinery as insurance against the depreciation of the peso, which was accentuated by the March Inflation Index. Despite the temporary reduction in the exchange rate gap and the rise in interest rates ordered by the Central Bank, they consider it a good time to reequip themselves. Planting equipment is the preferred equipment to invest in, followed by those used for spraying and, to a lesser extent, those used for harvesting and storage / post-harvest tasks.
On the external front, Russia’s invasion of Ukraine (with all the pain of loss of human life) has had a huge impact on markets. In this sense, we must take into account the importance of Ukraine as a producer and exporter of wheat and corn, as well as fertilizers, and the preponderant role of Russia in the energy markets. This has produced unforeseen increases in the prices of wheat, corn, soybeans, fertilizers, oil, etc. with positive impacts for countries that export cereals and oilseeds, but negative for those who must import fertilizers and fuels.
To price movements we must add problems in the supply chains, as is happening with diesel in the middle of the harvest season in Argentina. Neither the duration of the war nor its final consequences can be accurately estimated. For Argentina, the impacts have positive and negative edges.
From the positive point of view, The increase in international prices of cereals, oilseeds and beef, due to lower global production and logistical problems in the Black Sea, implies an increase in profitability.
Besides, the increase in prices of inputs, fuels and logistical problems creates cost increases for producers. In any case, the survey shows that even so, a higher percentage of producers think that the positive factors will exceed the negative ones.
“Finally, a project to tax unexpected income does not take into account that, although the prices of agricultural products have risen, production costs have also risen, which has deteriorated profitability. In our country it is estimated that finally the soybean harvest will be around 42 million tons, while in the case of corn, it will be about 3 million less than the previous campaign, around 49 million tons. With the harvest in its initial phases, there is still a perceived risk of production,” estimates the report.
The good international prices partially offset the lower production, and the good wheat prices for the 22/23 season encourage planting and early pricing. Producers in the United States, Brazil, Uruguay and Paraguay are concerned, as in Argentina, about the increase in production costs. “In the case of Argentina, we must add the macroeconomic disorder and political uncertainty, uncertainty in terms of yields. About 45% of producers express this as rational in the case of soybeans and 41%, in corn There are two factors that have a similar weight in delaying price fixing: About 17% of producers in soybeans and 18% in corn say they will sell once they have harvested. Meanwhile, 17% are waiting for higher prices“, they add.
The perception of the producers regarding the availability of the inputs required for the winter campaign is mixed. However, the majority (63%) report problems obtaining the necessary inputs, particularly diesel and fertilizers. It is interesting to note that the response is not categorical as more than a third think they are available.
Regarding the financing of the next campaign, producers do not face too many problems given the variety of alternatives available, in addition to having their own resources. In this sense, the difficulties in accessing dollars at the official exchange rate generate a greater propensity for self-financing.
“The policy of raising interest rates that the Central Bank is implementing to increase the demand for money by savers and reduce pressure on the dollar, for the moment does not seem to affect the financing of the final campaign”
Source: Ambito
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