(Photo: Like in real life, a farmer must make balance under an uncertainty ag-policy framework)
Grains production. The Buenos Aires Grains Exchange maintained its wheat harvest estimation at 18.8 MMT like in the past week, but reduced the barley one from 3.8 to 3.2 MMT, due to dry conditions in the southwestern of the Buenos Aires province and La Pampa province. Soybean area continues projected at 17.6 million hectares while corn planting advanced to 42.7% of the 6.4 million hectares projected.
Ethanol. The Government granted an 8% increase for the corn-based ethanol for the mandatory blend, for November. But this increase doesn’t compensate for the increase in the costs, mainly driven by corn. In an interannual base, while ethanol price was increased by 34%, corn rose 78%, dollar 64% and the inflation rate reached 55%. Currently, a liter of ethanol represents 3.2 kilograms of corn. Sources of eFarmNewsAr.com say that if this relation drops to 2.5, the production turns non-viable.
A non-trustworthy census? This Tuesday, November 7th, the National Census, and Statistics Institute (INDEC) disclosed the preliminary results from the National Agriculture and Livestock Census 2018 (CNA), which ended early this year. Some facts from the CNA show serious inconsistencies with other official data. For example, for the INDEC, the national beef herd to June 30th, 2018 reached 40 million head, while the Ministry of Agriculture, Livestock, and Fisheries (MAGyP) informs 54 million head to March 31st, 2018. On the other hand, the Census informs about cereals planted area around 11 million hectares and 14 million oilseeds, while the MAGyP informs no less than 15 and 20 million respectively.
Expectation about the new ag-policy. Next December 10th the new Government will take office, ending the neo-liberal four years cycle of Cambiemos coalition. Farmers maintain a high expectation about the policy of the Peronist government related to the export tax rate. Analysts discard that Alberto Fernandez and his cabinet will adjust the export tax to the original 10% imposed by President Macri in September 2018, but farmers are afraid that the elected government raise them even more to 15% for cereals and 30% for the soybean complex. According to ReutersAg “forward sales of Argentine corn and soybeans are zooming higher versus last year as growers hedge against possible increases in export taxes under President Alberto Fernandez”
Futures operation, up. The unique (after the merge) grains futures market in Argentina, MatbaRofex, hedged 5 million metric tons of grains during October. This volume represents a 19% increase in respect to October 2018. In the Jan-Oct period, 43,87 MMT were covered in the futures market, versus 37,78 MMT in 2018, representing a 16% increase YoY.