In recent days the first projections for the 2024/2025 agricultural campaignthe sector that contributes the most dollars to the Argentine economy. The market proposed different scenarios, depending on the weather conditions and the evolution of prices, which could significantly modify the situation of the reservations and the country’s capacity to face the heavy maturities of debt.
The economist and professor at the University of La Matanza Andrés Salinas, he remarked in dialogue with Scope that the climate and price variables will determine the foreign currency that will enter the country through exports. “It can really complicate your economic policy if you have an unplanned drought or, on the contrary, improve your income if you have a good crop. But it really The most likely scenario is a situation a little better than this yearTherefore, if everything goes relatively as expected, there should be no shocks that affect the desired course of the economy,” he added.
For its part, Alejandro Giacoiaan economist at Econviews, highlighted to this medium that, in a scenario of unification and without a blend dollar, all that flow will go to the official marketwhich will be a key factor for the evolution of reserves. However, he clarified that the current account of the Central Bank (BCRA) will suffer pressure from the demand side if normalization in import payments is maintained and economic activity is reactivated.
Scenario 1: favorable climate with price stability
Last week the Rosario Stock Exchange (BCR) released its estimates for the production of grains and byproducts for next year. In a favorable scenario in climatic terms, the estimated amount is 143.2 million tons9.3% higher than this year.
Likewise, they hope that the exports reach 101.5 million tons, which would represent an annual growth of 15.5% and the third highest value in the last decade, only surpassed by the levels of 2018/2019 and 2020/2021. In currency terms, this would imply an income of dollars of US$35.5 billion with current prices, almost US$5 billion higher than the value recorded in the previous campaign but US$6 billion below the values recorded during the boom in agricultural prices caused by the war between Russia and Ukraine .
According to data from the Congressional Budget Office (CPO)in 2025 debt maturities in foreign currency reach approximately US$16.7 billiontherefore in this scenario 47% of agricultural income would go towards fulfilling obligations with private creditors and international credit organizations.
It is worth noting that it still remains to be seen if the Government will be able to renegotiate the debt with the International Monetary Fundwhich explains about a fifth of next year’s total commitments.
Scenario 2: water deficit with price stability
However, under a scenario adjusted for water deficit, the production expected by the BCR is 128.8 million tons, which would result in a negative interannual variation of 1.7%. In this framework, the value of exports would be reduced to US$32.6 billionwhich would represent an increase of 6% compared to the last campaign, but 1% below the average of the last three years.
In this case, Debt in dollars would represent more than half (51%) of the annual income of the main export sector.
Based on data prepared by his consulting firm, the economist Lorenzo Sigaut Gravina outlined a “mixed” scenario, which includes some loss of yield due to drought and would generate a contribution of US$33.1 billion. “It is the most likely scenario,” he said.
Scenario 3: falling prices and low corn planting
For its part, the Buenos Aires Cereal Exchange (BCBA) planned a production of 130 million tonscontemplating the crops of soybeans, corn, wheat, barley, sunflower and sorghum. This would result in a slight increase of 1.3% versus the previous campaign.
For almost all crops, a year-on-year increase is expected, highlighting a 23.2% increase in wheat. On the contrary, In corn, a contraction of 5.1% is expectedas a result of a combination of factors, which includes the negative impact of the plague of leafhopperthe low flow of rains expected and lower profitability relative to other products.
“It is expected that ‘The Girl’ bring a lower level of rain than it normally brings, which would negatively impact the harvest, to which are added high temperatures for the remainder of this year (information from the national Meteorological Service). In this aspect we have more to lose than there is to gain, which is why we must be very attentive to the rain and temperature parameters that occur,” Salinas warned.
In this framework, and unlike Rosario’s projections, the BCBA foresees a 3.1% drop in agricultural exports, up to US$28,793 milliondue to the reduction in international prices. The latter is due to bullish forecasts regarding supply at a global level.
BCBA.JPG Exports
If these forecasts are met, Almost 60% of the foreign exchange coming from the countryside would be used to pay the debtas long as there are no modifications in the deadlines with organizations.
Regarding global prices, Salinas sees “several conflicting effects” with “the US producing well (supply goes up and the price goes down), Brazil with rain problems (supply goes down, the price goes up) and the Chinese stimulus package (demand goes up, the price goes up).”
“Argentina has commitments in 2025 for which it does not fully have the money ready, that is why It is likely that in the coming months the Government will announce an international loan (let’s follow China closely), some REPO, attract foreign investment or some debt exchange at shorter bond maturities. To this we have to add that negotiations with the IMF are ongoing and perhaps fresh money is being negotiated at this time,” he said in relation to the obligations that the country has for next year.
Source: Ambito
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