The flow of camions to the port area of Rosario It is usually a reliable indicator to predict what agricultural exports will be like in the short term. And this Monday, with 5,270 vehicles, The most optimistic visions about the next arrival of a “wave of dollars” were confirmed.
It is a number that duplicate than that recorded at this time last year, when there was also a harvest with excellent volume. But this year the income prospects are better, so much so that the minister Toto Caputo was encouraged to predict that the contribution of the field will be around US$42,000 million – much above the estimate made by the Rosario Stock Exchange-.
For now, a record for agricultural exports in terms of volume was recorded in March, with 12.6 million tons, an increase of 71% compared to the previous year and 35% above the previous record, registered in 2022.
Speaking in silver, March income was about US$2,000 million, led by corn, which achieved an excellent harvest of about 64 million tons.
But in April, the effect of soybeans, the main national export product, is already beginning to be noticed. Port logistics marksand 48% of the movement corresponds to the soybean complexwhile corn moved to second place with 40%.
The soybean harvest will be around 48 million tons, somewhat below last year’s level, and still with a good price in the international market -$426 per ton on Chicago screens-, although with a downward trend, given the abundant global supply due to better than expected harvests in Brazil and the United States.
The year of corn
Corn, on the other hand, has better prospects to defend its current good price – US$173 per ton – given that several factors converge in its favor. One is the decision of the US government to favor ethanol – derived from corn starch – for the production of gasoline.
The government of donald trumpwhich faces mid-term legislative elections, had promised a reduction in the price of gasoline, an objective that was complicated by global political tensions. And the use of biofuel partially mitigates the effect of rising oil prices. As a consequence, there will be a global aggregate demand for corn.
But, in addition, local experts see an advantage for Argentine producers, as a consequence of the changes in the forecast of Brazilian production.
“He dry climate in southern Brazil caused losses of 50.4% in second-crop corn in Paraná, which positions Argentina as an alternative supplier and adds support to local prices. Rosario slate soybeans closed at 312.3 dollars per ton and corn at 183.5 dollars per ton,” he analyzed Gaston Ignacio Alvarez.
And, to complete the favorable panorama, there is another factor that supports the price of corn: a greater purchase by the livestock sectorwhich now has incentives to fatten animals with grain.
With slaughter that fell 10% in one year, prices in the ranch market remain high, while demand for meat is on the rise. Consequently, if before the norm was to send cattle weighing 300 kilos to slaughter, now they are sent to the slaughterhouse with more than 480 kilos.
And the key fact is that cattle are fattened with corn, which although it has risen in the world market, is cheaper than ever compared to meat. To put it in numbers: historically, to buy 10 kilos of corn, the equivalent of one kilo of steer was needed. Today the cost is half a kilo of a bull.
Soybeans make numbers
The truth is that with the sales expectation of US$16.5 billion of the soybean complex and some US$7.5 billion of corn, the government is preparing to enjoy a period of abundant foreign exchange until the middle of the year.
The financial market reacted in line with this expectation, given that the dollar continues its downward path despite the strong foreign currency purchases carried out daily by the Central Bank – which already exceeded US$5.4 billion so far this year. Since, in addition, interest rates in the domestic market are also falling, the government found the ideal argument to respond to the classic criticism that the stability of the dollar is only explained by the “carry trade.”
However, although the history of March and the current movement of trucks in the Rosario port suggest a strong export volume, the truth is that there are still doubts regarding what will be the attitude of the producers.
It happens that, at the same time that the international upheaval generated a rise in agricultural commodities, there was also a sharp rise in the cost of fertilizers and other inputs, due to the spike in the price of oil.
In other words, a ton of urea, a basic input for fertilization of the new agricultural campaign, continues to be 51% above the price prior to the conflict in the Middle East.
Meanwhile, the soybean price in the Chicago marketalthough it has had a brief rebound with the news of recent days, it is still $4.5 below the peak reached at the end of March.
In summary, what truly matters to the Argentine agricultural producer, which is the profit margincontinues to show a discouraging panorama: You need to sell 1.65 tons of soybeans to buy one ton of urea. Before the conflict, that ratio was 1.12.
Of course, these figures are those that arise from the comparison of international prices. When they are corrected for the effect of the 24% withholding on soybean exports, then the cost of the input becomes even higher: each ton of urea is equivalent to 2.17 tons of soybeans placed in the port of Rosario.
No room for tax relief?
This situation is what causes complaints to continue to be heard in the countryside regarding the level of export withholdings. Even though there is a drop of two points compared to last year, the thinning of the margins It is being noticed. And in the most serious cases – those of whom they carried a financial debt-, the business equation is still in the red.
Meanwhile, a report from Marianela de EmilioInta expert shows how Argentine soybeans are in one of his worst moments of the last decade in input/output ratio. The situation is particularly serious when it comes to paying for diesel oil, urea and diammonium phosphate.
“To make investments in capital goods, such as a tractor or a silo, today you need twice as much grain as two years ago,” De Emilio’s graph, which warns of increasingly thin margins in the agricultural business.
This is why the insinuations, requests and claims about tax relief continue. The fiscal situation – with eight consecutive months of decline in tax collection – does not seem to leave much room for the minister to meet this request from the countryside.
In fact, the minister is receiving warnings about how the fiscal coffers may be impacted by the new oil situation. It is true that Dead Cow It will be able to leave an energy surplus of more than US$10 billion that year. However, there are economists who claim that this will not have such a notable impact on tax collection.
In the latest report from the FIEL foundation, Daniel Artana points to “a design error in the “mobile withholding scheme” for the energy sector. With the reform that has been in force since 2020, there is a cap of 8% on withholdings for exports, it is not possible to capture the largest margin when there is a large price increase in the international market. Instead, Yes, the cost of importing gas will be fully noticeable liquefied petroleum.
“In short, the higher income from withholdings will not be enough to finance the higher costs of imported gas and the higher subsidies for public transportation,” Artana indicates.
If, in addition to this situation, Caputo agreed to alleviate the situation of soybean producers, he would not only face a fiscal risk, but would also get into trouble with his colleague. Scott Bessent, to whom last year land promised that he would not repeat the “tax holidays” which sparked protests among farmers of the United States.
