MercoPress. South Atlantic News Agency

Argentine farmers hold on to their crops waiting for electoral promises, but 'dry' central bank reserves

Cereal exports last week fell 68.5% in terms of a yearly comparison, reaching only US$192 million, far below the normal weekly average.

Argentina's election season has dramatically changed the agricultural landscape in the country, one of the world's breadbaskets. Exporters are now more confident than ever that profits will soar next year, creating a short term impact of plunging sales abroad and reduced cash-flow in the Argentine Central Bank’s coffers, although that could change in 2016.

 A report from the CIARA-CEC (Cooking Oil Chamber and Cereal Exporters Chamber) grain exporting chambers said that last week was the worst of the year in terms of dollars brought into Argentina, as the sector’s businessmen see holding onto grain as the most profitable course of action ahead of economic reforms that may include a devaluation of the Peso and lower taxes for the sector.

Exports last week fell 68.5% in terms of a yearly comparison, reaching only US$192 million, far below the normal weekly average. The only comparable period in terms of sales came in mid-February, when 180 million was brought in over a short, three-day working week amid Carnival celebrations.

February is usually a weak month in terms of sales, as the first quarter of every year sees little to no soy bean exports due to seasonal reasons.

Last week’s result was comparable to the worst week of that first quarter. Although, output was already expected to fall for 2016, reports from the ground say sowing has somewhat recovered in the late stages of 2015, which might help 2016’s harvest from falling after all.

The consensus among farmers is that the sector will benefit from better incentives in 2016, making profits soar.

The two remaining candidates in the presidential race, Let’s Change’s Mauricio Macri and Victory Front (FPV)’s Daniel Scioli, view the sector as crucial for obtaining the dollars necessary to exit the so-called “clamp” on foreign currency trade, promising the end of export duties on corn and wheat as well as lifting export quotas.

Macri, however, is favored much more by the sector, as he has also promised to end the restrictions on the dollar trade in the first day of his potential presidency, a move that could bring the official dollar price quickly upwards, making exports even more profitable.

Scioli, on the other hand, has said he opposed any strong devaluation and says he will only end the restrictions on the dollar trade “gradually.” Shock reforms and strong devaluations would put the burden of macroeconomic reforms on the shoulders of wage-earners, Scioli’s advisers argue.

Macri was also the first candidate to promise a reduction of five percentage points per year in export duties on soybean. Other candidates had doubts about the viability of reducing that levy, as it could cost the state’s coffers too much in missing income.

Macri’s surprisingly strong showing in the presidential election’s first round on October 25, forcing a runoff with Scioli after coming only three points behind him, meant that expectations in the sector rose higher than they were last week.

A large part of Macri’s support came from the country’s richest rural districts in the provinces of Buenos Aires, Córdoba and Santa Fe .