Endless drought: in February barely a quarter of the dollars entered a year ago

The impact of the drought is getting worse every day. As in January, when dollar income from the field’s liquidation was at its lowest in more than a decade, in February the outlook does not improve.

Both months were plagued by lack of rain and low soil moisture, which spoiled much of the wheat harvest. But the exceptional settlement mechanism, the so-called “soybean dollar”, applied in September and December last year, also had an impact on the results. In January, because the inventory account was practically nil, since the settlement was brought forward to take advantage of the exchange rate differential. In February, on the other hand, the problem that adds to the drought is the wait: operators but also producers take for granted the implementation of the third edition of the soybean dollar, initially for May but, given the he urgency of respecting the objectives with the IMF, does not exclude that it will be announced for next month. Faced with this eventuality, any available stock is waiting for a more competitive dollar to be liquidated. This framework determines that over the past ten wheels, agriculture has entered some $350 million, or a quarter of the dollars that entered in the first ten days of February last year. In other words, the amount represents a decrease of 75% compared to February 2021.

During this time, The Central Bank has sold more than $800 million in the market, which includes yesterday’s payment of USD 262 as an advance for the import of LNG carriers. It is on this front that the government is planning savings, both budgetary and in currency outflows, of 2.1 billion dollars, according to Minister Sergio Massa.

The figure, however, is equivalent to a third of the losses that the government itself predicted due to the drought until a few weeks ago, before the new heat wave. From that moment, the Rosario Stock Exchange and the Buenos Aires Grain Exchange corrected the estimates.

“The impacts that the drought would have on the contribution of the sector in the current scenario are a year-on-year decline of $12,245 million in gross agro-industrial product (-23%); a reduction in exports of nearly $10,000 million (-23%) and a drop in collection of 19%, or $3,314 million,” said economist BCBA, Ramiro Costa. “However, he stressed that the impact could be even greater if rainfall does not normalize in the rest of the campaign and the risk of having early frosts becomes real, given the delays in the advancement of the sowing,” he added. . In this early frost scenario, according to the entity’s projections released yesterday, the revenue decline could exceed $18 trillion.

Regarding the estimates of the Rosario Stock Exchange, after the rains that occurred at the beginning of the week, the entity has ratified that the worst productive scenario of the last 15 years is consolidated. A week ago, the RBC reduced the estimated area for soybeans from 400,000 hectares “due to intense thermo-hydric stress” to 4.3 million hectares, for which a production of 10.4 million tonnes is expected.

This panorama that occurs in the most productive region of the country, called the central region, is also developed at the national level, where the Rosario Stock Exchange has negatively adjusted the harvest projection from 2.5 million tons to 34.5 million tons. If this prognosis materializes, it will mean the lowest volume of the last 14 campaignswhich will be a blow for the agricultural sector.

But it will also be for the Central Bank and the National Treasury, which will face serious difficulties in meeting reserve accumulation and fiscal targets, which will require renegotiation with the IMF. And it will essentially be a blow to economic activity, slowed by the impossibility of importing inputs due to the shortage of foreign exchange.

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