In a complicated context for producers at the time of accessing fertilizers, a private report reflected that if less fertilizers are used in the next corn planting, export losses of close to USD 1,794 million would be generated for Argentine corn.
The work of the Rosario Stock Exchange (BCR) was prepared by economists July Causeway, Guido D’Angelo y Florence Poet. It was pointed out that fertilizers are far from being a factor of pressure for the country’s balance of payments. Faced with an increasingly important need for the Central Bank to accumulate reserves, the entity maintains that this goal will be achieved if there is a strengthening of Argentine exports, above any limitation on imports.
In a context of tensions in global value chains, “the fertilizer market has been particularly disrupted. With the warlike outcome of the Russian-Ukrainian crisis, the global agricultural and energy markets were strongly stressed”, the report described. To all this it is necessary to remember that Russia is the world’s leading gas exporter., a source of energy that is also the main input to produce fertilizers. And for the development of this related industry, Russia is also positioned as the main global exporter of fertilizersstanding out especially in the nitrogen market.
The work also highlighted that during the past year fertilizer imports made by Argentina reached 4.5 million tons, valued at USD 2,279 million, a 13% increase in volume and 103% in imported value. In view of the aforementioned statistics, the growing need for soil fertilization, with increases in international prices, and the technical stoppage of the Profertil plant in Bahía Blanca were mentioned as aspects that affected the record level of purchase of fertilizers from world.
In addition, it was clarified that the loss estimate was reached in the next corn cycle, in case the problem of access to fertilizers is not solved, with a harvested area of the current campaign close to 7.2 million hectares, to which it is reduced by 10% in the face of climatic complexities and surface losses that have been observed recently. In addition, the productivity of the current season cannot be used in the estimation in view of the significant drought that was observed during the critical period for maize.
On the other hand, the decrease in reference yields of 13.4% was calculated by specialists taking into account the performance of the 2020/2021 cycle. And from the product between these two values “a productive drop arises that is close to seven million tons compared to a campaign with the reference yield. We reiterate that it is a theoretical exercise. To the extent that dollars are secured for fertilizer imports, this loss will be neutralized.”, the report clarified.
To all this, the prices that were used to value the losses are averages of the last three months of exports of these agricultural complexes. In this sense, the ton of corn is valued at USD 253 per ton. And if the current export prices of the cereal are taken, which are located at USD 264 per ton, the estimate would be somewhat higher. Also, this number leaves aside potential climatic problems, which could further push production estimates down.
Imports 2021
In addition, economists from the Rosario Stock Exchange pointed out that about 60% of imports last year “were explained by urea and monoammonium phosphate”. And it was added: “When the warlike outcome of the Russian-Ukrainian crisis occurred at the end of February, Argentina was already behind in its supply of fertilizers, importing very few quantities between January and March 2022, in a framework of international prices with significant raises”.
Beyond this, with a need for fertilization by producers and improvements in access to the foreign exchange market for fertilizers, they were determining factors for imports to register a better rhythm as of last April. “Although prices showed declines after their highs, this year it was imported in May with CIF prices between 106% and 157% higher than in 2021. However, in the accumulated, urea imports so far this year show a fall of 12% in quantities, while imported tons of MAP fell more than 7%”, commented the economists.
Finally, the Rosario Stock Exchange highlighted that the National Government and the Central Bank “are working to secure the necessary dollars for these vital imports. In any case, the problems remain and normalization will depend on how the availability of foreign currency evolves in the coming months.”
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