El Niño’s mixed blessings, Argentina’s FX reserves, Pemex

Projections released this week highlight that El Niño-related rainfall will provide some relief to Argentina’s key agricultural sector, with bumper corn and soy harvests likely. Higher agricultural export revenues should also help the process of rebuilding the country's low FX reserves, which have already started to improve on the back of Milei's initial actions. Elsewhere, the impact of El Niño is most likely to be felt via higher food inflation, which would present an upside risk to our interest rate forecasts. Finally, comments from Mexican presidential frontrunner Claudia Sheinbaum confirm our long-held view that the next president will be less supportive of Pemex and that a restructuring of company’s debt is likely.