All signs point to a $3 soybean in March/April when a very low volume crop leaves the fields. And although soybean dollars 1 and 2 helped to strengthen reserves and erase a possible horizon of sharp devaluation, it was a drawback for many productive sectors. Improving soybean prices drag down other grains such as corn, leading to unsustainable situations for dairy, feed and poultry industries. Another affected industry is biodiesel, as as the price of soybeans increases so does soybean oil, an input from which biodiesel is made, which will then be blended with hydrocarbon diesel to reach the pumps. With the soybean dollar, soybean oil has gone from $850 to $1,100 a ton, a cost increase that cannot be passed on to the price of biodiesel, because it is regulated by the Ministry of Energy. The result? Decrease in production and shutdown of plants. Added to this is the lack of oil availability for the first quarter, as producers and exporters are stocking up on pending soybean 3 dollar product.
Although it is supported by the Center for the Dairy Industry that the raw material will not be lacking, the drought has punished the farms. Also, according to the Liaison Table, about 400 establishments closed last year. In this context and with 75% of production destined for the domestic market, a war broke out between the industries to obtain greater volumes. Saputo of Canada began by paying farmers an extra $2 per liter. The Québec company, led by Lino Saputo, Jr., has indicated in the United States and Australia, and to a lesser extent in Canada and the United Kingdom, possible targets for plant closures and assures that with the results obtained it will improve efficiency in other regions such as Argentina.
The Association of Argentine Cooperatives (ACA), a major exporter and at the time the engine of Coninagro, one of the entities of the Field Liaison Table, created Agrocanje, a sort of Mercado Libre for the purchase and sale of used agricultural machinery. They have joined MaquinAR so that operations can also be paid for with grain, which saves on VAT withholding, profits and bank charges.
Argentina still has a long way to go to achieve the confidence that Uruguay has in international markets, but there are some companies that follow the path of seeking financing in green energies. Genneia, a leader in renewable energy generation of the Brito and Carballo families and the Darío Lizzano fund, among others, placed $73 million in tradable bonds, exceeding its initial $60 million target. They will join the Social, Green and Sustainable Bonds panel of ByMA, the local stock market. Genneia is the main issuer of these financial instruments. There is still a long way to go to catch up with Uruguayan green bonds whose yields are tied to meeting targets in terms of growing native forests and reducing emissions. The proceeds will be used to finance the construction of the first phase of the La Elbita wind project (103.5 MW) in Tandil, Buenos Aires province, and the Tocota III solar photovoltaic project (60 MW) in San Juan. Both projects will produce energy to meet the demand of large industrial users and help reduce the carbon footprint.
Argentina is back under the radar in some sectors. An example is green hydrogen, obtained from renewable energies. This is the case of the Australian Fortescue Future, who has carried forward the project of producing it in Río Negro. But as is also the case with gas liquefaction plants, it requires a regulatory framework. So they sent to the Casa Rosada what this law was supposed to contain: national, provincial and municipal fiscal stability, stability of exchange rates and tariffs, entry into the free exchange market and free disposal of what was produced from its exports. They also ask for a period of validity of the promotional scheme of no less than 30 years, as is the case in the mining sector. Everything indicates that the definition of this law remains with the next government.
Minister Massa’s promise seems more complicated every day to arrive in April with inflation below 4%. Last week, the Transportation Cost Index prepared by the Argentine Federation of Freight Transportation Business Entities and verified by Di Tella University was released. The index recorded a 5.55% increase in January, after accumulating a 121% increase in 2022, the highest in 20 years. The projections indicate that in February there will be a more marked increase – with an 8% floor – from the entry into force of the second installment of the wage contract and a projection of a diesel increase of around 4.5%, in the scope of price agreements between the national state and the oil companies.
Among the industries hampered by imports it’s the navy. They point out that Argentina has made a strong comeback to boat building but that in a small shrimp boat, 35% of its components are imported. Domingo Contessi, president of the Federation of the Naval Industry, says that since the beginning of 2020, 29 boats have been launched in Argentina, including 17 shrimp trawlers. And he warns that due to the delays they have gone from working in series to sequential and metering the inputs: “This situation makes them lose competitiveness,” he says.
With the huge amount of information handled by its associates, the Argentine Chamber of Commerce has decided to develop, together with Ecolatina, a consumption indicator that will be published monthly. They present it on Wednesday where it will become a call to attention on the slowdown in economic activity.
Source: Clarin
