Farmers sold 1.32 million mt of new crop corn compared with just 76,000 mt in the same week last year, with new crop wheat sales also strong at 485,000 mt versus 46,000 mt a year earlier. The 2019/20 crop was sold at a ratio of 3:1 [with the latter number representing the 2020/21 crop] before the export tax was raised from 7% to 12% in December. expectations are that there could still be a further upward revision for export taxes for corn and wheat, from 12% to 15%, the trader added. Data for the 2020/21 soybean sales campaign is yet to be released.
The U.S. credit rating agency Moody’s warned Wednesday that Argentina’s decision to pull out of trade negotiations conducted by the Southern Common Market (Mercosur) would mean a “sustained loss” of the country’s economic potential.
Country risk as measured by JP Morgan Bank rose 10 points, or 0.2%, to close at 3,999 points, after exceeding 4,000 points during the day. Bonds in dollars fell to 9% after the National Securities Commission (CNV) forced the Common Investment Funds (FCI) in pesos to invest at least 75% of its assets in financial instruments in local currency. The S&P Merval Buenos Aires Stock Exchange and Market (BYMA) index rose by 0.4% to 33,185 units.
International Reserves fell by $50 million to $43.55 billion. Stock market dollars decreased by 7.5% (9 pesos); with this, the exchange rate gap fell from almost 80% to 65.7%. The informal “blue” dollar rose to 121 pesos amid growing demand for the currency.
Due to greater optimism in the debt negotiation and the restriction to the FCIs to invest in dollars, the advances in the papers of Banco Supervielle (11.3%), Banco BBVA (10.5%) and Despegar (10.2%) highlighted. The rest of the firms in the financial sector also recorded an extremely positive day, with increases of no less than 6%. The only two companies that had negative variations in their assets in New York were Edenor (-1.9%) and Telecom (-0.7%).
Argentine soybean producers are buying more silo bags compared to previous years as they seek to stockpile production due to current low prices. According to the latest update by the Buenos Aires Grains Exchange, farmers are expected to produce 49.5 million mt of soybeans this year. The current price in the spot market is between $200-205, while the July price in the Matba-Rofex market is $217. The current price structure is making farmers defer grain deliveries. Another factor that is making producers defer soybean sales is the expectation of a devaluation of the peso against the US dollar in the future.
The international rating agency Moody’s adjusted its estimates for the Argentine economy on Tuesday and now expects a 6% contraction in 2020 due to the direct impact of the coronavirus pandemic. In its previous report, it had projected a drop of 2.4%.
In another attempt to restrict the demand for dollars in the stock market, the National Securities Commission (CNV) ruled this Tuesday that the Common Investment Funds in pesos must invest at least 75% of their assets in financial instruments and negotiable securities issued in Argentina exclusively in national currency. This Tuesday, the CCL “cash with liquidation” dollar, was close to 120 pesos.
With the leadership of the banks and YPF, Argentine shares traded on Wall Street rose sharply on Tuesday, up to almost 18%, due to investors’ more hopeful expectations in the sovereign debt restructuring negotiations. The most significant advances registered by Grupo Financiero Galicia’s ADRs +17.7%, Banco Macro’s +16.2%, YPF’s +14.3%, Banco BBVA’s +13.2% and Supervielle’s +12.7%.
Yamana Gold (NYSE:AUY) says it entered into an option agreement to sell up to 40% interest in a joint venture formed to hold the Suyai gold project in Argentina’s Chubut province. The initial deal to secure the option is for $2 million but has later amounts including $31.6M in various installments. A moratorium on mining currently is in effect in Chubut province, which must be lifted for the project to receive approval to proceed.