Ukraine is one of the world’s largest exporters of wheat, corn and sunflower oil, but the war and the blockade of its ports have stopped its shipment.
Immediately, the values of the commodities would operate with strong losses with a drop of US$ 12.3 in the contracts with delivery to September for wheat, according to estimates of the Rosario Stock Exchange.
Prior to the signing, commodity prices were already experiencing declines in recent months: the international price index of the Food and Agriculture Organization of the United Nations (FAO) fell from a peak of 159.3 points in March to 154.2 in the latest indicator for June.
“There is a risk in the sector due to the price of the next contracts given that the price curve is reversing in international markets,” economist Sergio Chouza told Télam.
In any case, Chouza believes that “a political agreement with the sector is necessary to guarantee that part of the stock will be channeled in the short term”, and a rise in interest rates since this “increases the cost of collection and the cost of opportunity of the sector for leveraging credits or sureties in pesos and not liquidating the stocks”.
In the same way, the economist and director of the Sarandí Consultant was optimistic about the decrease in the need for foreign currency to import energy as of August, which would allow “the reserve account not to fall as much.”
Also, Chouza believed that there is no need to devalue the official exchange rate.
“I agree with the assessment of the minister (of Economy, Silvina Batakis) and the president of the Central Bank (Miguel Pesce) that the official exchange rate is not low,” he said.
Regarding the rises in interest rates arranged by central banks such as the United States Federal Reserve (FED) or the European Central Bank (ECB), Chouza evaluated that the impact on the country is presented in the “outflow of capital from emerging markets ”, in addition to “reducing the potential growth rate of all the countries of the world”.
Similarly, the economist Alfredo Schclarek Curutchet argued that the rise in rates causes “international investors to start selling the sovereign bonds of emerging countries to go to US Treasury bonds, which makes the price fall in Dollars of Argentine bonds and increase the financial dollar”.
Likewise, regarding the settlement of grains, Curutchet considered that the “doubts about whether or not the Central Bank is going to lose control over the official exchange rate” means that “anyone who has products to export, as in the case of the field, wait and see what happens.”
“If everyone waits to sell grains, dollars don’t come in and if they don’t, at some point the Central Bank has to devalue, becoming a self-fulfilling prophecy,” said the Conicet associate researcher and specialist in macroeconomics.
For Curutchet, “from the individual point of view of the agricultural producer, it is somewhat rational to wait and see before liquidating and selling.”
However, the economist believes that this strategy has turned against producers because “the price of wheat today is already at the pre-war level with what the one who was keeping, lost.”
“This drop in the price of wheat is bad news for Argentina because it could somehow offset the increase in gas. If the field did not liquidate the grains when prices were high and now they are beginning to fall, everything is much more complicated because in the end they did not take full advantage of the months with high prices, ”he explained in dialogue with Télam.
Like Chouza, the economist and director of the Analytica consulting firm, Claudio Caprarulo, believes that there must be “an agreement with the sector to ensure the effectiveness of any of the measures.”
“When there is so much uncertainty, (exporters) are going to wait if they think that later there will be a strong increase in the exchange rate that compensates for the drop in commodities,” he analyzed.
Meanwhile, Martín Burgos, an economist with a Master’s degree from the EHESS in Paris, indicated that “it is possible” that the agreement between Russia and Ukraine will accelerate the settlement of grains.
“Lowering withholdings for a while, a month or two, could be a tool, but it is a debate because much is also lost in tax collection,” he said.
On the other hand, Burgos, in tune with Chouza, said that another problem is the interest rates offered to farmers.
“It seems to me that there is a total decoupling between the interest rate that is offered to sow with respect to devaluation expectations. They have two options: use the stocks they have or ask for loans, and if there are loans of 20% or 30% per year, obviously they have no incentive to use what they have in silobags,” said the economist.
Source: Ambito
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