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October 29, 2019

Argentina Elects a New President - Mr. Alberto Fernandez

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Argentines went to the polls on Sunday and elected Mr. Alberto Fernandez of the Peronist Party and his running mate the former president Mrs. Cristina Fernandez de Kirchner as Argentina's new president and vice president. With almost all the votes counted, he was receiving 48% of the vote, which is more than the 45% needed to avoid a runoff. The current president, Mauricio Macri is receiving 40% of the vote.

Mr. Fernandez is a law professor who has worked behind the scenes in politics, but has never held public office. Mrs. Kirchner was president from 2007 to 2015 and she succeeded her husband who was president from 2003 to 2007. When she left office, she was a highly polarizing figure and she still faces 11 counts of graft while in office.

The new president has not given many details on how he will keep the Argentine economy from sinking further into the abyss. Inflation is over 50%, interest rates are upwards of 80%, the country has huge debts to pay to the IMF and private investors, many Argentines have been thrown into poverty due to reduced buying power, and the Argentine peso has lost about 85% of its value since Macri has been president.

One of the big questions is how are they going to repay their dollar-dominated debts with such a devalued currency?? It is widely expected that the new administration will increase export taxes on agricultural commodities in order to shore up government revenues. At its peak, commodity export taxes accounted for 11-12% of total government revenues, but that percentage declined when President Macri eliminated or lowered the export taxes.

Mrs. Kirchner's return to power is not good news for the agricultural sector since her prior administration intervened heavily in the economy and the export markets especially for corn. Mr. Fernandez and Mrs. Kirchner will assume power on December 10th.