He government does not want to devalue, pero the market takes precautions. We expect a great devaluation after the PASO or when the next government takes office.
The STEP of the Frente de Todos were defined
Is the government going to devalue?
I don’t think so, especially when Sergio Masa is going to travel to the spring meeting of the IMF in order to reformulate goals again.
What will happen on Friday with the inflation rate?
Everything suggests that will be above 6.0% per month, there are versions that indicate inflation of 6.5%, others higher than 7.0%, the reality is that prices are being updated at a weekly rate, the dynamics of price increases is more and more recurrent, the increases are weekly , and although they do not spiralize, we are in trouble.
What will the Central Bank do?
I do not know but I think you should raise the monetary policy rate to 78.0% per year at floor levels of 80.0% to 85% per year, otherwise it would generate an incentive for investors to turn to the dollar, something we already saw this week with the MEP dollar that reached a maximum close to $410.
Economic activity is complicated
Highly increased utility bills are coming in, that will take money away from consumption. Although it is good business to buy in pesos at 12 installments, people do not have credit on their cards, banks do not risk increasing financing, and this helps to consolidate the dynamics of lower economic growth.
Private analysts raise the inflation floor for this year to 110%
On Friday the Survey of Market Expectations was known
Correct. They see 12-month inflation of 119.6% per yearand one devaluation of the peso of 122.2% per year. Besides, The wholesale dollar is seen at $464.
Do you agree?
Not at all, I believe that the next government is going to be cured of health and when it takes office it will make a great devaluation and adjustment of relative prices, especially in the rates of public services, with which the interest rate, the inflation rate and the devaluation rate were much higher.
This problem can be anticipated, after August 13 with the result of the STEP.
I leave the forecasts only in private reports, do not stop consulting them because we are very far from what the market average thinks.
How much soy is on the market?
According to ministry data, there would be no price around 30.7 million tons of soybeans, however, it is estimated that a significant amount would not be available.
With this soybean the producer has to live until the next harvest which would be in April and May of the year 2024.
The best possible scenario would be a sale of 15 million tons, which would be equivalent to the sum of US$ 8,400 million. It would be a true miracle if that happened. The recommendation to the producer is to get into debt and not sell, necessity has the face of a heretic and the 4 soybean dollar can be more tempting than the 3 soybean dollar.
How much corn would there be without a price?
A total of 36.4 million tons, contemplating that 33 million tons of corn from the 2022/23 campaign were harvested. It does not seem to be selling quickly, there are commitments to export about 11 million tons, and the domestic market must be supplied. The government intends to continue closing corn exports, since there is very little merchandise. The price will be hot by the end of the year, for now there is plenty of corn in the world, and in Argentina, exporters have a large quantity waiting to be able to export it. For now, and only for now, the price of corn will be quiet. Collect quantity when the late corn is harvested next July, after the STEP it will become difficult to get corn.
And wheat?
There is not much wheat in Argentina, therefore, the price will continue to be depressed, we have some 7.1 million tons without a price. Our price is higher than Chicago and Europe. At these prices, he would sell wheat and buy dollars, take credit in pesos, and buy inputs. If the rains continue it will be good to sow wheat.
What will happen to the price of corn, wheat and soybeans?
They will hardly go up in the short term, there is good weather in the world, Brazil has an excellent soybean crop, and the corn crop is much better. We do not see imminent rises in prices, there are no significant amounts to sell abroad, the scenario of a shortage of dollars is very large. On the other hand, we are facing a market intervened by the State, there is no room for increases in intervened markets.
Will they close imports?
I believe that a barrier will be placed on everything, and we will have to live with a scenario of few dollars at the Central Bank. The market is very scared, they have bought wholesale dollar adjusted bonds and dual bonds to be covered on a probable devaluation. Also some inflation-adjusted bonds.
* SDS Economic and Business Advisor
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