The rise could be seen coming, but even so the number is shocking: March exports broke a historical record, totaling US$8,645 millionwhich made it possible to triple the average monthly commercial balance of the last year.
These are numbers that allow us to better understand why the minister Toto Caputo It speaks of an export boom and that there is security to cover this year’s financial obligations with its own resources. If the March balance were the trend for the rest of the year, then there would be a net income greater than $25,692 million.
It is a volume of currencies that would allow coverage payment of interest on debt and also let the Central Bank continue accumulating reserves. Even more: the ghost of the current account deficit would disappear -the historical trigger of devaluations-, given that the surplus in the balance of goods would greatly exceed the deficit in the balance of services – where external tourism and online purchases stand out -, a “red” that is estimated at US$10,000 million.
Of course, for this situation to materialize and not remain a mere expression of wishes, it is necessary that every month foreign trade behaves more similar to that of March than, without going any further, that of February. On that occasion, both exports and imports marked a strikingly low level, with a mediocre balance of US$797 million.
Record oil…with old prices
What can be expected for the immediate future? In principle, everything indicates that the officials’ optimism has merit. To begin with, there is the obvious issue of oil: in February The price per barrel was around US$70, while after the US attack on Iran and the closure of the Strait of Hormuz, the price jumped to around US$100 million.
Until that moment, market forecasts were downward, because it was taken for granted that Donald Trump would continue pushing for a reduction of fuels, given that this year there are midterm legislative elections in the United States, and he had campaigned with the promise of a significant relief in the price of gasoline.
But of course, the war context and the uncertainty about how the situation in the Middle East will continue meant that prices remained high, and with extreme volatility in the face of news about the war. In any case, the possibility of a collapse to previous prices seems unlikely. In March, the Brent price It was above US$100 for the entire month. Now, after confusing announcements of truces followed by acts of hostility, the cruco is fluctuating above $90.
If, in addition, we take into consideration that the Vaca Muerta field continues to break production records and announce new projects, like that of YPFwhich will spend US$6 billion with the aim of increasing its shale oil production capacity, an area in which it aspires to be a player of global relevance. The objective is to reach a production of 215,000 barrels per day, which is more than double the production level at the beginning of the Milei administration.
At the beginning of the year, when the global expectation was that of a drop in the price of oil and there was speculation about the “Venezuela effect”, the Argentine government expected that the balance of the energy balance this year was US$10,000 millionwhich implies a jump of more than 20% in one year.
But now, after the changes in the international context, these numbers have been revised upwards, with the possibility of that the fuel contribution is US$15,000 million. For now, in the March balance exports were recorded for a record level of US$1,235 million, which implies an annual increase of 23%.
But the unusual fact is that, contrary to what one might think, the March record did not occur as a result of the jump in the price of oil, but rather due to a 29% increase in volume. The explanation given by Indec is that there is a certain “delay” between the moment in which customs operations begin until the export takes place. As a result, March oil sales They are still reflecting the prices that were in effect 45 days before.
Consequently, the next few months will show the full effect of that boom in pricesand oil, which currently represents 14% of total national exports, will begin to fight for prominence with agricultural products
Recalculating upwards
The truth is that after the March trade result, the forecast made by the economists participating in the Central Bank’s REM survey does not seem exaggerated. which in their last review projected exports of US$93,235 million and a surplus of US$14,114 million for the year. The number that the president risked does not even seem exaggerated Javier Milei in Congress, during his inauguration speech for the legislative year, when He mentioned the unprecedented figure of US$100,000 million.
Taking into account the price update period, only in April and May will the impact of the rise in the barrel of crude oil in the international market be noticed in Argentine accounts. And it is not difficult to imagine oil sales figures of around US$2 billion per month, given that the jump in the price from the beginning of February to mid-March was almost 100%.
But also, of course, there is the contribution of the field. Already in the summer there were good numbers, especially becauser the excellent wheat campaignwhich had optimal climatic conditions and in February contributed to 10% of total sales.
Now begins the time of year in which corn and soybeans make the big difference, giving the economic plan a break from possible exchange rate pressures and allowing the Central Bank to remain in “buyer mode.” In fact, for weeks the intense movement has been perceived in the port area of Rosario.
In March, the sale of primary products registered an interannual jump of 56.2% and, as happened with oil, in this case too the explanation lies in a greater volume of production and not in higher prices. In fact, a decrease of 3.8% was recorded in prices, which could be reversed in the coming months.
Regarding sales of industrial products of agricultural originthe sector that contributes the most dollars to the balance -US$2,659 million in March- there was also an interannual growth of 18.9%, although in that case there was not only an increase in the quantities produced, but also a jump in prices, by an average of 9.7%.
Dollars for the ears?
With these numbers on the table, it would seem impossible to refute Milei’s forecast that the BCRA “will have dollars coming out of its ears.” And yet, in the Argentine countryside The humor seems far from the optimism that the government shows.
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.
Speaking in silver, the ton of ureaa basic input for the fertilization of the new agricultural campaign, continues to be located 51% above the previous price to the conflict in the Middle East. Meanwhile, the price of soybeans at the Chicago marketalthough it has had a brief rebound with the news of recent days, remains US$15 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.
But, in addition, there is a classic situation: the exchange rate that plays a discouraging role for sales. So far this year, the wholesale dollar price has fallen 6.6% in nominal terms, while inflation has exceeded 11%. In other words, producers’ costs increased by 19% in dollars, something that cannot be offset by the rise in Chicago commodity prices.
This context leads those producers who have enough financial backing to wait to maintain a certain caution and speculate on the possibility of some tax relief measure. It is something that, this year, appears with fewer possibilities of occurrence, given that it would imply a fiscal sacrifice that Caputo cannot afford, given the saga of eight consecutive months of decline in tax collection.
