NORMA COMUNICADO AFIP SUBJECT PRODUCTIVE INFORMATION – SISA DATE 29-01-2019 AUTHOR DEPARTMENT OF TAXES – ZENI Dear customers, because in the beginning of the heavy harvest (sunflower, Pcia de Chaco), there were certain problems with producers to be given bills of lading or carry LPGs, the AFIP informed that, in most cases, the reason was that they had not presented the information of the area planted in the SISA system, depending on this situation, and in view of the “strong” beginning of the heavy harvest, it was requested from the Center of Corridors by the agancy, that you could read the following statement: Sincerely, SISA: Heavy harvest start-up Agricultural producers must report certain production data, so as not to have problems in the commercialization of grains and seeds. As of the 2018/19 season, the Agricultural Information Simplified System (SISA) is underway. simplified and significantly reduced the information that should be presented by agricultural producers and includes, among other novelties, a “scoring” for producers and operators of the grain and seed trade. In order not to have problems in the commercialization of grains, agricultural producers and their accounting advisors are reminded that the following production data corresponding to the campaign 18-19 must be reported: a) Stock of grains 8/31/18 . b) Surface of grains destined to the fine harvest. c) Surface of grains destined to the heavy harvest. This presentation is extremely simple and is done entirely via Website, that is, without the need to go to any state office. The form of input of these data is explained in the Agricultural Microsite available on the AFIP website (http://www.afip.gob.ar/actividadesAgropecuarias). Finally, it is clarified that in no case the fact of owning debts with AFIP affects the “State” in which a producer or operator is classified in SISA.
With just over a month to go, the market evaluates the preliminary numbers of the 19/20 campaign, subject to an eventual agreement between China and the US. At the local level, the market rewards the transfer of deliveries from May to November with a rate of 13.4%.
After the 95th Annual Agricultural Perspectives Forum was held, the granary markets begin to internalize the first trends of the new agricultural campaign in the US. The Outlook Forum is an event organized by the US Department of Agriculture, which addresses issues related to agricultural activity, foreign trade, policies and financing, among other issues. On this occasion, it was held on Thursday 21st and Friday 22nd of this year in Arlington, Virginia. The forecasts for planting intention 2019/20 are the first elements to delineate the possible supply scenarios. After successive years of growth, the USDA consensus foresees an annual fall of 4.7% in the area that would be destined for soybeans, which would cover 34.40 mill.has. As counterpart, part of the hectares that the oilseed releases would turn to the corn crop that would add about 1.20 mill.has with respect to the previous cycle with an area of 37.20 mill.has.
Relative prices have a direct impact on planting decisions by North American farmers. The outcome of the trade dispute between Donald Trump and Xi Jinping altered the behavior of the Soya Nov19 – Maize Dec19 contracts, tilting the balance more in favor of the cereal. This is reflected in the ratio in Chicago that currently stands at 2.23 and is significantly below the 2.40 units that averaged the two previous campaigns at these instances of the year. It theoretically determines that soybeans are quoted more than twice as much as corn and the higher it is, the more hectares will be produced at the expense of the second.
The decline of this indicator responds to the substantial accumulation of stocks in the US. The offer of beans has grown more than proportionally to its demand, basically due to the impact of exports and resulted in larger surplus of soybeans. At the end of the current commercial year, stocks would reach to comfortably cover 81 days of consumption without resorting to the new harvest. This figure is about 43 days in the case of corn. The only factor that would generate a sudden change in the proportion of covered area would be the arrival to a final solution, or the closest thing to it, between China and the US. Almost a year after this conflict, the latest developments show that the US president would delay the application of the additional tariffs that were originally scheduled to begin this Friday, March 1, although the date of said extension was not specified.
Turning to the domestic sphere, harvest values continue to oscillate in the range of 235-240 US$/tn according to the condition and delivery port. The commercialization of the new soybean thrives slowly and with hardly a third of the operations agreed on a firm price. This accounts for the poor predisposition of the producer to get rid of his merchandise and some uncertainty when it comes to compromising his harvest. The price structure provides clear incentives to defer deliveries with a premium that far exceeds the average for other years. The widening of the May-19 futures spread against the more distant positions promotes closing sales by postponing the unloading. Opting to sell a part of the production in the forward market with delivery to Nov-19 yields a more attractive return than the operation at a closer term.
For this strategy, additional expenses derived from storing the grain must be incorporated into the margin equation. In the second place, it is of exclusive nature to have the financial capacity to stretch the term of the unloading and therefore, of their collection. Since the May19 – Nov19 differential operates at slightly more than U$S 16/tn, the resulting implicit rate stands at 13.4% in dollars, well above other credit lines. If we draw a comparative line, exactly one year ago, the rate stood at 9.6% and the stimulus to postpone deliveries was more limited. In turn, this interest included an additional component that is not currently present in the quotes: The monthly reduction of export duties. Although it was not done subsequently, in February 2018 a reduction of 0.5 percentage points per month was discounted. Thus, between May and November a difference of 3 points was charged for withholdings, so that the rate effect was clearly lower. Meanwhile, if we go back to 2017, the pass between both positions offered a rate of 9.8%. Clearly the market rewards today those vendors who are willing to dose deliveries.
The climate stability generated by a prolonged period of sunny days, during the first half of April, accelerated the march of the machines throughout the country.
Under ideal environmental conditions, the producer concentrated mainly on the threshing of soybeans that advanced by leaps and bounds. From the beginning of the work is estimated that until this Sunday they threshed something more than 15mill.tn. At the same time, if we only count the last ten days, we collected the largest volume of recent years at these instances of the month. Only slight interruptions of short duration appeared from Thursday to Sunday with the appearance of intermittent showers in Buenos Aires province. In any case, intermittent showers of greater duration over the central and southeast regions, provided the humidity necessary for the maturation of late crops and/or second crops.
The most notorious developments took place in the south – central regions of Santa Fe, north of Buenos Aires and in most of Córdoba province. The yields that are materializing comfortably surpass the historical averages. As an example, in the northern nucleus, more precisely in Monte Maíz and Isla Verde, in the department of Marcos Juárez, Córdoba, results of 46.9 qq/ha with peaks of 49.8 qq/ha were reported. If we go more towards the southern end of Córdoba, the harvesting machines shed up to 57.0 qq/ha with an average that oscillated between 48.0 – 50.0 qq/ha. Over the northwest of Buenos Aires until this time, they reported up to 51,0 qq/ha on average. In the mentioned regions it is verified that the early crops have been able to reach their greatest potential. The counterpart is that these results tend to correlate with lower levels of protein, a not lesser issue concerning the start of factories.
The fast work in key agricultural areas resulted in a vertiginous growth of trucks traveling to the port terminals of Up-River. Given the persistent arrival of cargo vehicles, the logistics are practically at the top of their capacity: The main accesses are overflowing and long lines are generated to be able to unload the grains in the delivery terminals. In this context of harvest pressure, the business of unloading is the most “valued” and this is how the available goods market collapsed to levels of 210 US$/tn. Meanwhile, a few days after its expiration, the future “Apr-19 Rosario” operating in term presented a modest growth to 216 US$/tn or its equivalent in local currency with 9,320.40 AR$/tn.
Given that the decrease was more limited in the deferred contracts, the “carry” to November grew to 26 US$/tn and represents an annualized rate of 20.6%. Although this yield does not include the expenses incurred for storing the harvest, the market clearly encourages the proportioning, as far as possible, of the deliveries towards the end of the year to maximize the sale price. In the same way, an alternative is to close seven-month business at AR$ 13,890/tn if we include the Futures Curve of the exchange rate in ROFEX. Thus, the resulting rate in pesos amounts to 84% and more than compensates the financial costs and space for storage of the merchandise.
Internationally and on the eve of the first plantings in the southern United States begin to delineate the first details of the 2019/20 campaign. With the climatic factor as axis, the implantation will be developed gradually towards the north until concentrating in the agricultural belt and covering the Midwest of the country. The intense rains that affected the states of Nebraska, Iowa and Illinois left excess water in large sectors and caused some delays with the early incorporation of corn. Beyond the fact that there is still a margin of time, the possibility is evaluated that each hectare that is not destined for cereal may have an increase in the area of soybean as a correlate.