Dollar: the Milei index

. – Simple, we made a Milei index very easily.

How is that?

. – Very simple, as society is very sensitive to political issues, we have found an indicator that will tell us if Milei wins in the first round or not. If she doesn’t win in the first round, there will most likely be a second round, and there the coin will be in the air.

How is the Milei index?

. – The national government told us a few days ago that the wholesale exchange rate will be frozen until November 19, the date of the second round of elections, if any.

So?

. – We will follow the future price of the dollar in October, today it stands at $434.5 and accrues an implicit annual rate of 135.6%. If we take into account that the wholesale dollar will remain fixed at $350, it would seem that the market does not believe the Central Bank that it will leave the price of the exchange rate frozen.

. – If the price of the future dollar in October in the month of September exceeds the level of $450, this would indicate that the market does not believe the government will maintain the exchange rate at $350 or that Javier Milei will win the elections in first round and this will cause the government on October 23 to release the rise in the dollar. This must be combined with the amount traded on the October basis.

. – If the price of the dollar falls below $400 in September, this would indicate that we are going to a second round scenario, where the currency will surely be up in the air. This must be combined with the volume of business.

With this you take off captious interpretations?

. – Correct, we let the best survey be the market, which votes every day with constant money.

How do you view bonds and stocks?

. – We are in a scenario of clear decline in the prices of international financial assets, however, the local stock market and bonds continue to rise. This implies that the markets have a good climate with Argentina, everything seems to indicate that whoever wins, we are going to a change in the economic scenario.

Were measurements taken for the field?

. – It’s not a soybean dollar, but it looks like it. Exporters will be able to liquidate soybean meal and oil, leaving 25% abroad, while 75% will do so in Argentina. This implies 25% to the CCL dollar, which is $770 (we took it from the rava.com.ar page), and 75% to $350, that gives you a dollar of $455, which implies that you could be paid by taking the closing of the soybean on Friday, which is U$S 371.4 (average of Sio Granos), for a dollar of $455 this would give you a value of $168,987.

But don’t they enable a soybean dollar?

. – Correct, what they will do is increase the value of soybeans in the market, therefore, it could trade at US$482.8, which multiplied by $350 gives you a value of $168,987.

Will it reach that value?

. – I don’t know, it’s speculation, exporters should offer a very tempting price for soybean producers to sell.

What was the maximum value in soybean dollars?

. – The maximum value measured in MEP dollar was US$ 263 in soybean one dollar, US$ 305 in soybean two dollar, and US$ 254 in soybean three dollar.

If exporters buy at $168,987, how many MEP dollars would they be?

. – That would give you about US$ 254 bills per ton.

What do you think?

. – That the exporters will go out tomorrow to offer US$450 for available soybeans, which for a dollar value of $350 would give you a value of $157,500 per ton, which represents the MEP US$236.80 dollar value.

It seems to me that the market will seek to take US$ 250 bills

. – That would give you a value of $166,250.

You are making me dizzy

. – Soybeans tomorrow would have to be worth a floor of $157,500 and a ceiling of $168,987, the market price would appear between these values.

Will the producer sell?

. – A few days ago we said that we had to sell corn and not soybeans, today I tell you sell soybeans and save corn. The producer needs cash, the debt generated by the lack of harvest due to the drought is very large.

What do you think of these measures?

. – They do not help the producer who pays rent in soybeans and benefit the owner of the land. If any producer still has soybeans, it is a help, but they do not benefit the majority of producers at all. A second issue is the added value, this makes the cost of producing meat and milk more expensive, the government with these measures buys more inflation in the future.

The government needs dollars

. – It is clear, and it is your right to take these measures, what you must also measure are the collateral damage that they leave, in this case more inflation and loss of profitability of the value-added sector. Many cost increases cannot be transferred to the price, the counter sets the price for you.

Milei would tell the market

. – It’s the same, the counter graphs the relationship between the one who sells and the one who buys. The buyers are salaried employees, who have lost a lot of buying power, and a lump-sum increase doesn’t help.

conclusions

. – The future dollar in October will tell us who, if there is a winner on October 22, or we go to a second round on November 19.

. – The October future dollar is trading at $434.5 if it exceeds the $450 level, the market will be discounting that Javier Milei wins, if it falls below $400 it would be discounting that we are going to a second round.

. – It is necessary to follow the volume of contracts negotiated on that date, currently they add up to the equivalent of US$ 364 million. It is necessary to see if this volume rises to more than US$ 1,000 million for the month of October.

. – During the week we will have a new soybean value that will make it attractive to sell some of the holdings in the market. For it to be a triumph for the government, it would be necessary to liquidate US$ 2,500 million, remember that the reserves are located at US$ 27,944 million.

. – The government is very lucky, soybeans are rising in the Chicago night market.

. – This week dollars arrived from abroad via the IMF, the World Bank and the IDB, we entered the BRICS and soon we will also ask for money. We are serial hosepipers.

. – We look forward to the candidates making explicit the economic plans for the first 100 days of government, not for the next 3 years. We need to know what will happen from December 10, 2023 to March 31, 2024, in a situation that will be very difficult.