In the first quarter of the year, the industry as a whole was relatively stagnant, but the performance between sectors was very heterogeneous.
Under this scenario, the food industry, mainly the milling industry in Santa Fe, compensates for the collapse in automobile production.
According to official data covering the first two months of the year, total exports reached USD 7.974 billion, which represents a 4% year-on-year increase compared to the same period in 2015. However, if the evolution of external sales of each segment is examined, a very disparate behavior is observed.
The evolution of export sectors
The fall of the crude oil price In the short term, this has had a positive effect on the trade balance, given that Argentina is a net importer of fuels, natural gas and oil. However, if only exports are analysed, the impact has been negative. In this regard, the decrease in Fuel and Energy exports (55%) is explained by a 30% decrease in quantities and a 22% decrease in the average price.
Another of the major victims of this situation is the steel industry. The main export product of this segment is seamless steel pipes, which are used mainly for the oil industry. Exports of this product fell from USD 76 million in the first two months of 2015 (a value already significantly below its usual level) to just USD 13 million in the same period of 2016.
With respect to dairy industry, the global oversupply of powdered milk, largely due to increased production in Europe and New Zealand, led to the collapse of the price of this product. Added to this is the economic and balance of payments crisis facing Venezuela, the main destination for Argentine dairy products.
As a result, dairy farmers have been the most affected, given that the industry has significantly reduced (in pesos) the price paid to the primary producer, to the point that it is currently below the average cost of production.
Something similar happens with the automotive industryBrazil is facing a sharp decline in its level of activity. According to IMF data, the country's GDP fell by 3,8% in 2015 and is expected to fall by another 3,5% this year.
As our main destination for the sale of products in the sector, automobile exports fell by 46% year-on-year in the first two months of the year, while motor vehicles for the transport of goods fell by half their value.
Moreover, the production of agrochemicals shows better prospects for 2016, mainly because a recovery in the area planted with corn and wheat is expected from the second half of the year.
In line with the above, in the agricultural sector Producers began to liquidate their accumulated stocks. Once the new government decided to eliminate export duties on the main agricultural products, together with the strong depreciation of the official exchange rate, after the lifting of the restrictions; exports from the food industry, mainly milling, were significantly boosted.
Sales of fats and oils (mainly soybean oil) increased by 68%, while food industry waste (largely soybean pellets) was also among the fastest growing segments. Similarly, foreign sales of cereals increased by 55%.
En synthesisThe situation of the sectors is uneven, so that growth or crisis can be observed depending on the branch in focus. The evidence seems to indicate that a large part of the contraction in foreign trade, and of the industries that are currently in a situation of stagnation, were affected by external shocks; such as the price of crude oil, the crisis in Venezuela and that of Brazil.
The beginning of the year also seems to indicate that agriculture will once again be the most dynamic sector of the national economy, especially considering the measures taken in favor of the sector.
In our full report, which we have made available for download, we provide greater depth to the points presented, as well as an overview of the situation of the main industrial sectors dedicated to the domestic market, placing special emphasis on the sector that has been most affected: the sector of constructionWe invite you to read it.