(Photo: like in February, grains futures contracts dropped in respect of 2018)
Buenos Aires, April 3rd. Despite the normalization of the 2018/19 Argentine grain harvest, with a production of 50 MMT of corn and 54 MMT of soybean, futures contracts operation in the Buenos Aires Futures Exchange (MATBA) doesn’t reflect this circumstance.
Its data center shows that during March 3.85 MMT of future contracts were operated, 9% below March 2018. This negative variation followed the February one, when operations dropped 6% in respect to last year. Only January shows a 14% positive variation. The first quarter accumulated operations reached to 10.15 MMT, 2% below 2018 (see chart below).
During March 2019, corn futures exhibited the worst interannual performance, dropping 35%, while wheat futures grew 33%, and soybean futures remained stable.
“The futures market reflect the economic and political uncertainty that rules over the country”, MATBA’s general manager Adrián Isnardo tells to www.eFarmNewsar.com. “When uncertainty is increasing, the players trend to delay their decisions and hence they withhold businesses”, he adds.
But in a most deep analysis, Isnardo divided what happened during last March. “The volume operated is the average of the month. In the first half we saw a apathetic market, but in the second half the trend was reversed and operations climb to more than 200K tons per day. We expect that this volume will continue increasing during April and hence we will see a large grain volume operated in the market”, he says.
In addition to the comments of Isnardo, there is a great expectative about the evolution of the exchange rate. After several months with dollar priced AR$38/39, in the last days it climb to AR$44/45, in consonance when the arriving of the harvest (corn and soybean) to the ports.
Government needs that farmers sell its grains and dollars flow to the Central Bank. But the market expects the dollar climbing to AR$50/51, the floor of the FMI’s agreed flotation band, after that, the Central Bank is authorized to sell to dollars to maintain the exchange rate.
Nobody knows what will happen in the next months, but it’s probable that farmers sell the minimum grain volume to cover their financial debts and then, they “sit” over the grain, waiting for a little more of certainty in the economic and political evolution.