Fears grow over weak agricultural prices

…that, while the climate continues to gradually improve, and with the recovery of reserves in the soil, the lower temperatures also brought relief to the main grain-producing areas of the country, now the concern focuses on the international weakness in agricultural prices, which this Thursday retreated again. Thus, while in Argentina the latest losses caused by the drought and heat stroke at the end of January and beginning of February continue to be evaluated, at the international level, the USDA (US Department of Agriculture) forecast on a probable record harvest in that country; added to the war conflicts such as the one between Russia and Ukraine, which is about to turn 2 years old; and that of Israel-Palestine that can escalate in that region; Together with the relative weakening of Chinese purchases, they converged to the current weakening of prices. In this case, The concern is not only among the producers, but also reaches the authorities who increasingly depend on the income of foreign currency from the coarse harvest. which is starting now with sunflower, and continues with corn, and finally with soybeans in April-May. The magnitude of the decline is evident with the losses recorded in the May position of the different products, compared to the last day of last year, and which amount to US$50/tn for soybeans; US$22/ton for corn, US$23/ton for wheat. Half of them occurred so far in February.

… that, even with the current losses, the 23/24 harvest would improve substantially compared to the previous one, although it is feared that it will not be able to compensate for the volume lost then (about 50 million tons), the negative impact would still be amplified by the lower contributions that impact both foreign currency income and tax collection (VAT, withholdings, etc.). According to the Ciara Agroindustrial Monitor, The accumulated crushing of soybeans during 2023 totaled 27,120 million tons, the lowest volume of the entire period analyzed, and a drop of 11,339 million tons compared to the same period in 2022, when the accumulated grinding was 38,459 million. And 18 million tons below the record of 45.1 million in 2016. “This led to the worst foreign exchange inflow in 18 years.”, says the report. According to what they indicate, the annual total was US$19,742 million, with a decrease of US$20,696 million, (51%) compared to the same period in 2022 when an income of US$40,438 million was reached. The drop in volumes, in the case of soybeans, determined that the idle capacity of the industry remains close to 70% due to lack of raw materials. And, despite the expansion of temporary imports (largely from Brazil), the risk that oil companies will have to close their plants for maintenance remains high, especially if the damage to the local harvest continues. And, even without major volume losses, the drop in prices will impact both the entire chain and the State coffers since, from the middle of last year to this Thursday’s prices, prices in Chicago had fallen. US$200/ton in soybeans; US$130/ton for corn, US$200/ton in wheat.

… that, “in the supply of steers the decline is -12.5% and in young males (calfs and MEJ) the drop is more moderate (-4.7%), as well as in heifers with a -2, 5% year-on-year,” according to a recent Rosgan report. This market also indicates that “world meat prices fell in January, experienced its seventh consecutive monthly drop.” Meanwhile, the local square of Cañuelas appears “stable, but due to lower supply that compensates for the weakening of demand”. However, this last data is not what the 2023 balance shows based on the “general inelasticity that meat consumption has presented in the last two to three years, in the face of a process of strong real deterioration in salaries.” In this sense, ”despite the sustained increases in prices, meat consumption not only did not fall, but rather increased slightly. In fact, in 2023 the general increase from 111 to 113 kilos per capita (total meat) is almost entirely explained by an increase in beef consumption, since the rest of the items, both chicken and pork, remained stable “, they point out.

… that the Association of Argentine Cooperatives (ACA) will celebrate a new anniversary in Rojas (Buenos Aires), on February 21, a meeting that will be organized together with the Carabelas Agricultural Cooperative. ACA precision agriculture, crop technology and digital solutions for the countryside; In addition to the marketing of grains and projects aimed at caring for the environment, they will be some of the topics addressed, although data and marketing strategies will also be a reason for exchange between producers. In that sense, some comments from Brazil show that, from the neighboring country, it is expected that threshed corn will be placed more in the domestic market than in exports. “This could open a much more interesting export window for Argentina”, experts maintain. Less optimistic is the outlook for sunflowers, which have already begun to be harvested from the north. According to specialist Jorge Ingaramo, “Argentina’s participation in the world trade in sunflower oil would go from 7.4 to 6.9%, with sales of 0.95 million tons in 2024. Already in 2023, they fell 30.3% Argentine external sales of crude oil in dollars, compared to the similar period of the previous year (INDEC). According to the Argentine Agroindustrial Council, total sales of the sunflower complex decreased in dollars by 25.4% compared to the previous year, reaching, despite the sharp drop in international prices, an export value of US$1,410 million.