Grain export firms last week settled US$553.775 million, or 23.8 percent more than the same five days of 2013, according to the CIARA and CEC grain export chambers, which account for a third of all exports from the country.
The country thus appears to remain on track for a record-breaking season, despite the weekly settlement weighing in below the average rate of US$665.5 million per week set between April and the end of the third week of June.
To date, a selling peak of US$941,727 million was registered on the week ending May 9 and a low of US$451.42 million on the week ending June 19, with the latter a day shorter due to the June 20 bank holiday.
In total, the farming sector has sold US$14.418 billion this year, five percent more than by the same time last year.
At the rate grain export firms have sold their produce between April and the third week of June, the thick of the selling season, US$3.32 billion more will have been settled by the end of July, when the soy-selling season comes to an end.
This would leave the grand total for the season at US$16.43 billion, US$8.7 billion shy of the record set in 2011. Considering that US$15.51 billion had been sold up to July 29 in 2011, according to the CIARA and CEC, the country appears to be on track for a record-breaking season.
Beyond July, other crops and hoarded wheat would still bring in US currency.
Encouraged by the near-15 percent devaluation in January, the margin of increased inter-annual settlement up to the end of April had regularly clocked in around 15 percent. In other words, dollars were flowing in quicker.
The return of the hoarder
Farmers and export companies are seen as retaking to their hoarding practices of old as speculation about another significant devaluation for the peso by the end of the year, and macro uncertainty on the outcome of the government’s struggle with the holdout creditors has certainly not come as relief.
The Buenos Aires Grains Exchange recently reported that growers had collected 95 percent of the harvest so far.
Farming sector leaders told the government back in February that solid soy prices in Chicago and the Buenos Aires Grain Stock Exchange’s prediction of a record soy harvest of 55.5 million tons would send the year’s settlement soaring past the US$25.13 billion record set three years ago.
Hoarding may increase or wane according to exchange rate developments, but could also be affected by soy prices, whose futures were marked down last week.
Soybeans hit a four-and-half month low of US$11.32 a bushel at the start of the month. The US Department of Agriculture on Friday increased its forecast for soybean inventories by 12 percent to 140 million bushels, exceeding expectations by nine percent.
Prices dropping
At the end of last week, front-month soybean futures in Chicago, where Argentine export firms trade, sank 34 cents to US$12.95-3/4 a bushel after falling as low as US$12.49-1/4, the lowest price since February 2012. New-crop November soybeans futures dropped 18 cents to US$10.75 a bushel after setting a contract low of US$10.65.
With approximately US$28 billion in debt repayable by the end of 2015, a favourable resolution for the government’s struggle with holdout bondholders from the 2001-02 default makes a record-breaking season of settlement crucial to push back a return to the dwindling of the Central Bank’s foreign reserves, which have remained comfortably around the US$29 billion mark for the last four months.
The US$2.306 billion trade surplus this year up to the end of May is significantly lower than the US$3.932 billion seen in the January-to-May period last year, highlighting the importance of strong grain settlement in 2014.
In their weekly joint release, CIARA and CEC said that grain has made up “36.9 percent of the country’s total exports, making Argentina one of the main food-producing countries in the world.”