The agricultural production would reach a total of 125.3 million of tons, a harvest much higher than last year. Given this, the Government faces a challenge that is to convince the field of liquidate as much as possible with the current exchange rate. Given this, two situations can be analyzed: on the one hand how does the exchange rate arrive measured in historical terms and that incentives offers national administration to the countryside.
It should be noted that the production of soyArgentina’s main export product, would reach 50 million tons, 150% more than in the previous campaign. The one of corn to 57 million tons (+58%), wheat to 14.5 million tons (+26%) and sunflower to 3.8 million tons (-24%).
“The largest quantities produced occur with the lowest prices recorded. Considering the futures for each of the identified crops, on average, The international price of soybeans would be 12% lower, that of corn 37% lower, that of sunflower 8% lower and that of wheat 3% lower (Dec-24 vs. Dec-23)”, indicated a report from Quantum.
The combination of prices and estimated production quantities gives a value of the campaign of almost US$37,000 million, an increase of US$12,000 million compared to the previous campaign. This amount is distributed between exports, sales to the domestic market and inventory accumulation.
“The highest value of the production of the main grains, concentrated in soybeans, It is good news so that the BCRA can continue accumulating international reserves. However, for this greater production to translate into greater liquidation of exports, there must be adequate incentives“, broad Quantum.
In general terms, the incentives to liquidate exports and not hoard grains are a function, mainly, of the expected evolution of international prices, the expected variations in the official and free exchange rates (gap) and the exchange rate. interest.
Dollar and harvest: how the exchange rate arrives in historical terms
Considering the evolution of the official and effective bilateral real exchange rate since the 118% jump in the official exchange rate, it is important to analyze whether The real official exchange rate remains competitive when compared to an average historical record.
At prices at the time of the December devaluation, The official wholesale exchange rate is $510 compared to $370 prior to the devaluation. The effective exchange rate for imports is $599 compared to $399 (including the country tax, which was 7.5% for goods at that time), and the blend is $623 versus $503 prior to the devaluation (without considering withholdings).
“In all cases, above the long-term average exchange rate of $477 (period 1991-2024),” Quantum reported.
Dollar and harvest: how incentives reach agriculture
The difference between the 2% monthly variation of the nominal exchange rate and the average monthly inflation of around 17.5% between November and March opens some questions regarding the exchange rate policy that will govern at the time of the liquidation stage of the coarse harvestwhich must be cleared to induce destocking in export products.
Given this, it is worth asking,The BCRA will maintain the 2% monthly nominal devaluation Without modifications, will make a correction in one go in the exchange rate or will modify the current blend (80/20)?
“Given current commodity price futures, if the gap remained lowthe strong fiscal and monetary contractions continued and the presumption continued to exist that the interest rate will be higher than the devaluation rate of the official exchange rate It could be thought that the incentives are aligned so that exports are liquidated,” they explained from Quantum.
That is, for the consultant, The BCRA should adjust interest rates based on a sustainable exchange rate policy so that the demand for money increases.
Source: Ambito
