It is expected that Argentina’s Ag futures will grow 35% this year

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A good sign for the Argentine farm economy: during the past January, the Buenos Aires Futures Exchange (MATBA) operated 3.2 million metric tons of grains futures, growing 14% versus January 2017 and beating a new record for this month reaching 60 MMT.

In the previous years (2015 to 2017) MATBA operated between 1.5 and 1.9 MMT of futures contracts in January. The first large step occurred in 2018 when volume jumped to 2.8 MMT, but now the trend seems to secure and the wheat is the “star” crop.

As its output grew from 11 MMT prior to 2015 to current 19MMT, the use of futures contracts grew too. In January 2019 800K tons were hedged in futures contracts versus 350K in January 2017. Adding December of each year, the bimonthly total reaches to 1.9MMT in 2018/19 versus 1.1 MMT in 2017/18.

Meanwhile, the corn futures contracts remain stable from one year to the next. Both in January 2018 and January 2019, operators hedged 450K tons. On the other hand, soybean contracts dropped from 1.29 MMT in 2018 to 0.97 this year.

“The arriving of market makers to the MATBA are helping to increase the volume of the operation; on the other hand I think that farming is living a generation change, where young people are running the business with a better approach to the futures markets than their fathers”, grain and futures broker Delfin Morgan said.

“The grains futures market has a huge potential in Argentina, but we must consider that this growth will come from hedge funds, neither by the selling end, the farmer, nor by the buyer end, the exporter”, Morgan adds.

The broker says that the convergence of a record wheat harvest and high prices derived in a large interest to assure better prices via futures and options contracts.

“I agree with Delfin”, the manager of the MATBA, Adrian Isnardo, says in dialogue with “But it is also important that the banks will be able to operate in grain futures. Currently, they are impeded to do it, but the government financial authorities told us that they will remove this impediment promptly”.

“We are very enthusiastic with the growth of the grains futures operation. We passed from 26 MMT hedged in 2017 to 44 MMT in 2018, and we hope a 30/35% of increment for this year. We think that 2019 could end with 60 MMT hedged in the merged market”, Isnardo affirms in relation to the merger between MATBA and the Rosario Futures Exchange (ROFEX), that could be operative in June or July.

“One of the key tools for this growth, furthermore the market makers operation, is the Direct Market Accession (DMA) platform, that allows the final user to run its own hedge strategies. We hope users continue to increase the direct operations”, Isnardo adds.

Source: efarmnews

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