How much did the 2023/24 agricultural season recover from the drought, why did it fall short of its potential, and how did international prices and the new exchange rate policy influence it? October 2024 report.

Young corn plants in rows in a planted field, backlit
Maíz en sus primeras etapas de crecimiento.

The weather gave the Pampas region a break, and summer brought much-needed rain. This allowed for a productive recovery for Argentine agriculture, closing the 2023/24 season with a total production of 138 million tons (48 million soybeans, 57 million corn, and 16 million wheat).

📄 Download the report (PDF)

However, despite representing a substantial increase compared to the previous season, this volume is still below potential. This was mainly due to low yields for the 2023 wheat crop, which did not receive enough water. There were also low yields for corn, a crop that was severely affected by the leafhopper plague [ 1] throughout the region.

Production by crop and area sown in Argentina, from 1989/90 to the 2023/24 agricultural season
Producción de granos por cultivo y área sembrada, 1989/90 a 2023/24.

International prices and foreign exchange settlement

In mid-2022, commodity prices reached their all-time highs at current prices (not adjusted for inflation). From then until mid-October 2024, a decline was evident. Compared to October of last year, the decreases were -21% for soybeans, -18,4% for corn, and -18,3% for wheat.

Lower-than-expected production and low international prices also resulted in low foreign exchange earnings from agricultural exports, at least until September according to official data.

In the first three quarters of the year, exports from the oilseed and cereal complexes have totaled US$18.476 billion, some US$1.700 billion more than in the same period of the previous year.

Foreign exchange settlements from the oilseed and cereal complex, in millions of current dollars, from 2018 to 2024

Exchange rate policy and producer prices

On the other hand, the new government implemented a different exchange rate policy starting in December 2023. There was a sharp initial devaluation of the official dollar (102%) and a crawling peg system of 2% monthly devaluations was implemented.

Since then, and accompanied by fiscal spending adjustments, the cleanup of the Central Bank's balance sheet, and the rules on currency issuance imposed on the monetary authority and fiscal surplus imposed on the Treasury, the exchange rate gap has narrowed considerably with respect to the financial and black market dollars . This has led to a significant improvement in the prices received by producers. These improvements range between 85 and 90% in dollar terms compared to October 2023.

Price evolution. In US$ per ton. Jan 21 to Oct 24

FOB prices and producer prices of soybeans, corn and wheat, in dollars per ton, from January 2021 to October 2024
Precios FOB y al productor de soja, maíz y trigo, enero de 2021 a octubre de 2024.

Outlook for the next campaign

Globally, future stocks of both wheat and corn are expected to decline . Consumption is projected to increase, while production is not expected to rise proportionally. This is expected to exert upward pressure on future prices for these grains.

The situation is different for soybeans, where production is expected to increase more than consumption. This would increase future stocks and push the price of the grain downward.

In addition to the productive sector, there is also the financial sector. Since August of this year, the US Federal Reserve has modified its monetary policy, making it more expansionary and lowering its benchmark interest rates. This has led to a depreciation of the US dollar, which in the financial sector functions as just another commodity.

In other words, there is an inverse correlation between the value of the dollar and commodity prices . When the dollar rises, grain prices tend to fall (and this was happening until August). Conversely, if the dollar depreciates, grain prices are expected to rise.

For these reasons, international grain prices could be expected to improve for the next season. Finally, better local prices and more favorable weather prospects provide a solid foundation for the upcoming season.

[1] Small insect that feeds on the sap of the corn plant and transmits a bacterium that affects the development of the plant, causing it to become stunted and yield less.

Open access, for use and citation

The report is available freely and without charge, under a Creative Commons license (CC BY 4.0):

Monitor Agropecuario – Campaña 2023-2024. Informes del Observatorio UNR N.º 68 — Serie Informes de Coyuntura N.º 27, octubre de 2024. ISSN 2683-9067 / 2683-9075. Autores: Alfredo O. Bula y Germán A. Tessmer.