On the third Sunday (11/19), the second round of elections in Argentina, where the clash took place between Sergio Massa, current economy minister, and Javier Milei, candidate from the extreme right.
Milei secured victory in the second round with a difference of more than 10 points in relation to his opponent, reversing the results of the first round, in which Massa had an advantage.
Although Argentina and Brazil are important trading partners, the political relationship between the two countries has been shaken for some time due to the different political and economic orientations adopted by the presidents of each nation. This scenario could impact trade negotiations within Mercosur.
The Argentine agribusiness sector is optimistic about the new president's victory, believing that the measures proposed by Milei's government can improve the economic situation in the medium and long term.
However, Argentine commodity suppliers started the week cautiously, controlling the volume and price of vegetable oils, which are in the off-season. This occurs, however, to await moves from the new government and understand how they can benefit the sector in December and the beginning of 2024.
Potential impact of revisions to export rules on the Argentine agricultural economy
The new government plans to review the current export rules, proposing the reduction and even exemption of taxes for some products, in addition to changing the control of the official exchange rate. Producers and suppliers postpone sales until an official position on the changes is established, resulting in an increase in inventory.
Until changes to export rules occur, this stock could negatively impact commodity prices. Argentina starts 2024 with a greater stock of corn, soybeans and sunflowers, and their derivatives. This occurs during the off-season in Latin America. Furthermore, this year's favorable weather should contribute to a recovery in volumes compared to the 2023 harvests.
The Argentine Rural Society (SRA) highlights that the country's grain producers and livestock farmers are requesting the abolition of taxes and export limits. These restrictions have affected the industry for years. Therefore, now is an excellent opportunity to radically transform the country’s agrarian and political situation.”
CONINAGRO, one of the country's main agricultural associations, declares that Argentina is beginning a new phase. This step promises to bring prosperity to all citizens.
By: Júlia Vilela | Soft Oils unit broker
