March 12, 2014
Agro-dollars come in faster
Firms sell US$277M more than same 7 days of 2013, peso rises to 7.79 per US$
Cereal and oilseed export firms grouped under the CIARA and CEC chambers settled US$496.43 million last week, more than double than during the same seven days of 2013, as the government continued to sigh in relief at the dropping official and black market dollar rates.
Although markets were quiet due to the Presidents Day holiday in the United States, the peso continued to strengthen, capitalizing on the momentum generated by the unveiling of a reliable consumer price index last week, and closed one cent lower at 7.79 pesos per dollar.
Meanwhile, on the black market, the “blue” dollar dropped 10 cents to 11.80 pesos, prolonging its downward trend.
CIARA and CEC, whose data accounts for a third of the firms in the market, pointed to a consolidated acceleration in sales of grain abroad, just under two weeks after the government secured firms’ commitment to inject US$2 billion into the economy by the end of the month.
The peso’s surge to an average 7.80 pesos last week since January’s sharp devaluation did not dissuade export firms from selling, particularly with forecasts suggesting that soy prices will continue to lower in Chicago.
Last week’s grain settlement was 126.28 percent higher than the US$219.37 million sold during the same week of 2013, arguably indicating heightened hoarding in the latter seven days.
The influx drove the total sold abroad by the sector this year so far to US$1.9845 million, surpassing the amount collected last year during the same period by almost 10 percent.
The peso’s steep depreciation last month, with its peak just above 8.02 pesos, seemingly served as enough incentive for the aforementioned to cough up their savings units, namely the coveted soybean. The government’s assurance that the peso would remain stable around that mark for the foreseeable future reassured firms further.
Present at the meeting with Capitanich — who was accompanied by Central Bank Governor Juan Carlos Fábrega — last on February 7 were CIARA head Alberto Rodríguez, Cargill CEO for Argentina Hugo Kranjc and CIARA vice-president Javier Racciati.
Fábrega’s presence highlighted the importance of the sector in swinging the balance of the Central Bank’s foreign reserves.
The heavyweights told the government officials that the sector would be able to bring between US$27 billion and US$29 billion to the table by the end of the year, approximately equivalent to the total amount currently in the BCRA’s reserves account.
Rain affects harvests
Prices could be affected further by the intense rain that swept through most of Argentina’s rural regions for the last few weeks has led to concern over the performance of soy harvests, with Buenos Aires Grains Stock Exchange climate analyst Eduardo Sierra affirming that plagues have struck crops.
“There is a plague of caterpillars (affecting) soy, and they (farmers) are starting to starting to attack all foliar diseases, so this will probably lead to a cut in production,” Sierra added.
The Buenos Aires Grain Stock Exchange has estimated that Argentina will muster up a 53-million–ton soy harvest for the 2013/2014 season, for which sowing ended only recently.
According to the National Meterological Service, in the last 24 hours, 50 millimetres of rain fell in large part of Argentina’s central agricultural region, with rainfall expected to continue intermittently at least until Friday.
“Entre Ríos, Santa Fe, eastern Córdoba and all of northern Buenos Aires (the country’s chief agrarian provinces) are the most affected,” Sierra concluded.
Herald with Télam, Reuters