March indicators show a drop in production of 29.6%, a collapse that would deepen in April. According to INDEC, in the third month of the year, the use of installed capacity in this segment was 28.7%. In the sector, they estimate that this number could have fallen to 10% during the last month. In March, sales of the clothing sector and the white item (table linen, bed and bath) collapsed by 65.1%. The outlook does not look very encouraging for the future.
The fund committee should evaluate whether the country entered a “credit event” by not paying $503 million. Non-payment sets up a default that will end up triggering the Credit Default Swap (CDS). It does not change the situation of the sovereign issuer, Argentina, since it is an agreement between private parties: the fund that took out insurance on its Argentine bonds will be able to deliver them to the entity that has insured them in exchange for compensation. According to market estimates, this situation could trigger payments of between $1.3 and $1.5 billion.
The National Government’s collection plummeted mainly due to a real decrease of 60% in the Income Tax, concerning that collected in 2019, following the postponement of due dates. The VAT collection fell by 13% due to a nominal increase of 25.2%, below the annual inflation rate for the period. At the national level, a decrease of 8% in the fuel tax was observed, although in this case, the daily dynamics is very variable.
With the current composition of the withholdings of 33%, keeping all other values constant, the tax burden per ton amounts to $165.49, which is equivalent to 45% of the market value of the product and represents 74.19% measured on the gross margin. The Soybean Chain Association (ACSOJA) proposes to reduce the current withholding from 33% to 20%, which could increase production to 68.5 million tons in the 2026/2027 agricultural season.
The new cereal campaign would reach a harvest of 22 million tonnes. Grain-equivalent exports, adding grain and flour, could get a record 15.5 million tonnes. Planting would grow by 3% over the previous cycle and could reach 7 million hectares. Wheat grain exports would generate revenues of $2.87 billion, with current prices of future shipments. External sales of flour would total another $227 million. The wheat chain could leave the country with a foreign exchange income of more than $3.1 billion during the 2020/21 trade cycle.