To this whopping issuance we will have to add that these days we are issuing so that agricultural producers settle the soybean dollar at $230, when imports are paid at $167, which implies a loss of $63 per dollar for the Central Bank. A real Chinese business.
Regarding soybeans, in the market, the December position is worth US$ 370.5 per ton which, at a price of $230, gives us a value of $85,215 per ton. It is striking that the January position is worth US$407.50, the February position US$393, and the March position US$386.50. Could it be that exports have room to pay a little more and they don’t? The FOB price of soybeans is US$ 589, when you pay just US$ 370.5 it makes us think that you could pay something more. The export could say that the soybean is used to transform it into soybean oil and meal, in this case we do not see a drop compared to previous months either, therefore, something more could pay. We will tell you shortly what you could actually pay.
In summary, the Central Bank has 4 sources of issuance: transitory advances to the Treasury, payment of interest from the leliq, purchase of bonds in $ and purchase of U$S soybeans.
On the reserves side, they continue to fall compared to the levels we had a year ago. As of November 25, 2021, the reserves were US$ 42,238 million, while, as of November 25, 2022, they totaled US$ 37,538. million, which reflects a decrease of 11.1%.
The stock of the monetary base amounts to $4,428,452 million and grows 37.8% annually, it is a very low increase if we estimate that inflation would be 6.0% in the month of November and in the last 12 months it would add 94 ,4%. This is recession.
When the government issues pesos, one part leaves them on the market and the other withdraws them from the market via placement of bills and passes, for which it pays an annual rate of 75%. The stock of this indebtedness went from $4,221,115 million a year ago, to $9,101,385 million today, which adds up to an increase of 115.6%.
The sum of non-remunerated and remunerated monetary liabilities (Monetary Base plus indebtedness) went from $7,434,653 million to $13,529,837 million, which gives us an annual increase of 82.0%. Slightly less than inflation of 94.4%.
The equilibrium dollar, which arises from comparing the total monetary liabilities against the reserves, a year ago gave us $176 and the alternative dollars were worth $203, while today the equilibrium dollar is located at $ 360 and the alternate dollars sits at $315.
The government drags in its public accounts a huge fiscal deficit that will increase in the months of November and December due to the end of the year. It is true that in recent months tax revenues have risen more than tax expenditures, but this effort has not been able to reverse the negative result of the public accounts.
It has been announced on several occasions that foreign dollars would enter to strengthen the reserves, however, none of this happened. The reality is that the government had to go out and implement the soybean dollar two in order to capture more dollars in the short term, which will be lacking in the medium term, since the soybean sold does not multiply, it is the stock we have and every sale today, makes that we won’t have it tomorrow.
Buying dollars at a high price, to sell them at a low price, is not a business in Argentina or anywhere in the world, it is the cost that a government pays to finance itself in the market. The result of this will be more inflation and a greater gap.
Producers are liquidating US$ 370.50 soybeans when in truth they should be paying much more. According to our calculations, probably wrong, exporters could be paying US$ 400, since withholdings were lowered by 2.0% for exporting flour and oil. This would imply that the soybean market price should be around $92,000 per ton and not the $85,215 per ton that is currently paid.
The four sources of issuance carried out by the Central Bank lead us to a great distortion of relative prices in the economy, since it finances the Treasury, pays interest on the Central Bank’s own debt, issues to buy bonds and also to purchase soybeans at a differential price. All of this leads to currency liabilities being bullish pressure for the gap between alt dollars and the wholesale dollar.
For now, and only for now, alt dollars have been parked around $320.0, however, if the pace of issuance picks up, we will see higher prices by the end of the year.
Fixed-term rates will continue at 75.0% per year, which gives us an effective rate of 107.0% per year. To beat this rate, you can buy a Treasury bill maturing on March 31, 2023 that yields 117.1% per year (S31M3).
The inflation expected by the market is around 121.0% per year, arising from comparing the bond in pesos that matures on October 17, 2023, which yields 128.0% per year, and the inflation-adjusted bill in pesos that matures on October 18. of September 2023 that yields 7.0% per annum (X18S3).
Inflation November 2022 measured 12 months back would be around 94.4% per year, as of November 2021 the alternative dollars were $203, buying them today at $320 looks like a bargain.
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