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Argentina has a new cropping record: between January and August 2021, they exported USD10 Billion more than in 2020, what does this mean for the economy?

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Income from foreign exchange for August fell compared to July, as expected due to seasonal variations, but as El Cronista anticipated it was still the highest in Argentine history.

What will be the impact?

Exporting companies of grains and agricultural by-products made the best settlement for the month of August in history as announced by El Cronista. They entered USD 3,049 million during the eighth month of the year and, thus, so far in 2021 it would already be exceeded by USD10 billion to the total of foreign currency compared to 2020.

The data belong to the Chamber of the Oil Industry of the Argentine Republic (Ciara) and the Cereal Exporters Center (CEC), which represent 40% of Argentine exports. The monthly sum reflects a 74.9% increase compared to August 2020 when the sector had liquidated USD 1,743 million.

Thus, the accumulated foreign exchange income from agricultural exports in the first eight months of the year reached USD 23,229 million, when in August 2020 it was USD 13,348 million so that It has already exceeded it by more than USD 10 billion, well above the total net reserves of the Central Bank that added up to USD 6,500 million.

The farmers saved the year for the Government and has already liquidated more than USD10 billion, almost double the total net reserves. Agricultural exports are going to be a record this year in dollars, not in quantities, ” explained. Fernando Marull of the consulting firm FMyA.

In the last season, the lack of rains had a negative effect on the volume of both grains and cereals. Approximately production fell 10% compared to the 19/20 campaign, but prices increased by 40% so the harvest for the whole year increased by 30%.

“Why did you save the year for Alberto Fernández? because the Central Bank was able to buy and accumulate the reserves it lost last year and Guzmán, for the higher collection of withholdings, gained half a point of fiscal deficit. The record inflow of dollars from the field allowed the government not to make so many adjustments, “specified Marull.

The export product that generates the most foreign exchange for the country is Soybean flour which is equivalent to 14.2% of the total sold abroad. The second most commercialized product, according to the latest Indec figures, was corn (11%) and the third was soybean oil (6.9%).

What to expect in the next few months?

For a seasonal issue always in the second half of the year, the currency settlements are lower than in the first six months. Therefore, a lower forex season is expected until the end of the year.

Even so, due to the effect of the rise in the price of commodities – compared to the average price in 2020, it registers a 30% increase – there could be new clearance highs. The record income of foreign currency from agriculture allowed the Government, for example, to expand the amount of imports, essential to reactivate the economy.

“From now on the Government has two options due to weak foreign USD reserves. One is to lower USD imports or the Central Bank can put dollars to supply what is lacking.

Source: La Cronista

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