The weather gave a respite to the Pampas region and the summer brought the much-needed rains. This allowed a productive recovery for Argentine agriculture, closing the 2023/24 campaign with a Total production of 138 Mtn (48 Soybeans, 57 Corn and 16 Wheat).
However, despite representing a substantial increase compared to the previous campaign, this volume is still below the possibilities. This was mainly due to low yields for wheat 2023 that did not receive enough water, as well as low yields for corn, a crop that was hit by the plague of the "leafhopper"[1] throughout the region.
By mid-2022, car prices will be commodities had reached their historical highs at current prices (not deflated by an inflation index), from there a fall in the same was evident until the date, mid-October 2024. Compared to October of last year, the declines were -21% for soybeans, -18,4% for corn and -18,4% for wheat.
Lower than expected production and low international prices also resulted in low liquidation of foreign currency from agricultural exports, at least until September according to official data.
In the first three quarters of the year, exports of oilseed and cereal complexes have liquidated US$ 18.476 million, some 1.700 million more than in the same period of the previous year.
On the other hand, the new government implemented a different exchange rate policy starting in December 2023. There was a strong initial devaluation of the official dollar (102%) and a system of 2% monthly devaluations was implemented, of the type crawling pegs.
Since then, and accompanied by fiscal spending adjustments, the clean-up of the Central Bank's balance sheet, and the rules of non-issuance imposed on the monetary authority and fiscal surplus imposed on the Treasury; the exchange rate gap has narrowed significantly with respect to financial dollars and BlueThis led to a significant improvement in the prices received by producers, these improvements range between 85 and 90% in dollars compared to October 2023.
Price evolution. In US$ per ton. Jan 21 to Oct 24
Globally, Both wheat and corn are expected to experience a future reduction in prices. stocksConsumption is projected to increase, while production is not expected to increase proportionally. This would have an upward influence on the future price of these grains.
The situation is different for soybeans, where production is expected to increase more than consumption, which would increase future stocks and influence the price of the grain downwards.
In addition to the productive part, there is the financial part. Since August of this year, the Federal Reserve of the United States has modified its monetary policy, making it more expansive and lowering its reference rates. This generates a depreciation of the American currency, which in the financial field works as a commodity more.
That is, there is an inverse correlation between the value of the dollar and the price of commoditiesWhen the dollar rises, grain prices tend to fall (and this was the case until August), while if the dollar depreciates, grain prices are expected to rise.
For these reasons, it is expected that the international price of grains will improve for the next campaign. Finally, better local prices and more favourable weather prospects constitute a good basis for the next campaign.
[1] A small insect that feeds on the sap of the corn plant and transmits a bacteria that affects the development of the plant, causing it to become stunted and produce lower yields.
