The South America Crop Report for January 23, 2017

By Patrick Archer and Eduardo Blasina

The Argentina Crop Report

A new report this week from the Rosario Grains Exchange (BCR) gives the first preliminary quantification of the crop damage nationwide due to climate conditions over the past three weeks. The report by Emilce Terré and Sofía Corina of the BCR’s Economic Studies Division estimates a 1 million hectare (2.47 million acre) reduction in harvest area which translates into 5.2 million tons worth an estimated US$1.05 billion. As a result, the total production estimate for Argentina grains in the 2016/17 cycle is being revised downward from 124.9 million tons in December to 119.7 million tons today. The report gives an additional breakdown of area that will go unplanted by crops including 350,000 hectares of soybeans and 200,000 hectares of corn. In summary, the total planting area for the current campaign in Argentina is being reduced by 1.6 million hectares (3.95 million acres) which includes 600,000 hectares that will go unplanted and 1 million acres already planted that will be abandoned due to flooding and various diseases that have impacted Argentina soybeans, corn, sunflower, sorghum and other crops this year. (Mirador Provincial)

The policies of the previous Kirchner administrations (kirchnerismo) are to blame for Argentina’s current “monoculture” of soybeans, said Gustavo Vionnet, the president of the Santa Fe Rural Association Confederation in a very candid interview with Cadena Oh published by Sin Mordaza. “Argentina producers respond to macroeconomic signals from the federal government, and the policies of the Kirchner administration made the wheat and corn crops disappear which hurt the Argentine economy over the medium and long-term.” Speaking directly to the climate challenges producers in Santa Fe are currently facing, Vionnet added: “The problem is a multisector issue. The load on the water table is 50% greater this year, because of the rainfall. There is a serious lack of understanding of the depth of the water problem in Santa Fe, and we need people sitting at the table who know the most, and not a bunch of political activists. This is business and the objective is to make money not social solidarity.” (Sin Mordaza)

Argentina producers and suppliers are all making plans to attend the annual Expoagro which will be held March 7-10. La Voz del Interior gives us a preview of some of the companies that will be unveiling their award-winning innovations at the annual expo. One of those is Sembradoras Pierobon which will be presenting its Turbo Planter which uses a new “Air Flap” system. The invention is a simple solution to a major problem of seed jamming in air drill systems. It is a seed dispenser with air regulating curtain. The seed drill, which has variable dosing through hydraulic drive motors, was designed to reduce machine conditioning times and optimize productivity. Dolbi is another company that will be presenting its rotating cotton baler which won the Ternium Expoagro gold medal. Another gold medal winner is TecnoCientífica which will be presenting their innovative Grain-Q Analyzer which is the first real-time grain quality control monitoring device for harvesters made entirely in Argentina. (La Voz del Interior)

The Brazil Crop Report

“The uninterrupted rains over large sections of central Brazil and Mato Grosso (MT) in particular, are going to make soybean harvest activities difficult which is making producers apprehensive now that many areas are ready for harvest. Still there are no reports of loss of quality or productivity,” says meteorologist Marco Antônio Santos. More rain is in the forecast for the coming days with heat and high humidity facilitating cloud formation. And more rain is in the forecast for the states of Goiás, Mato Grosso do Sul, São Paulo and the southern half of Minas Gerais. The forecast map in the article shows expected rainfall over the next five days (1/21-1/25) with some regions anticipating 100 millimeters (4 inches) of rain or more. As far as soil conditions, the rain is helping maintain “excellent” levels of humidity which is favoring crop development. But it is true that the cloudy weather can affect the maximum concentration of grain mass and also the growth of plants, as it reduces radiation rates and affects productivity.” (Terra/Climatempo)

Twenty foreign investor groups control over 3 million hectares (7.4 million acres) of farmland in Brazil, according to a global survey of land purchases by Grain.org. Brazil is one of the protagonists of the movement with large corporations and funds both making large acquisitions. BrasilAgro, with capital from Argentina’s Cresud controls over 400,000 acres of Brazil sugar cane and grain farms. Canadian fund Brookfield Asset Management controls 240,000 acres for soybean and sugar cane production in Brazil. Among Chinese state players, Chongqing Grain Group, owns 250,000 acres and Cofco controls 360,000 acres of sugar cane. France’s Louis Dreyfus Commodities holds over 1 million acres of Brazil land for sugar cane, rice, citrus and dairy production. India factors in the list of large Brazilian landowners with Shree Renuka Sugars ownership of 340,000 acres of sugar cane, while Japan is represented by both Mitsubishi (172,000 acres) and Mistui & Co. (214,000 acres). Holland rounds out the list of top 10 largest land owners in Brazil with BXR Group’s 30,000 acres. (Brasil de Fato)

Argentina will once again have a big impact on wheat prices in Brazil, according to an article this week in Folha de S.Paulo. The National Supply Company (CONAB) report says last year Brazil produced 6.7 million tons (MT) of wheat, imported 5.95 MT and consumed a total of 10.7 MT. This year, the scenario for the Brazilian producer may not repeat that of 2016, at least as far as wheat prices are concerned. Argentina, the main supplier of wheat to Brazil, is facing a combination of reduced planting area and crop failures. With this development, more of Brazil’s imported wheat will need to come from other countries outside of Mercosur which will mean higher taxes and prices for importers. These imports and the diminished supply of the product in the local market will favor higher prices for wheat producers in 2017,” concludes Mauro Zafalon in the Commodites section of Folha de S.Paulo. Zafalon says CONAB is currently preparing for two auctions: the first for 137,500 tons of wheat and the second for 52,500 tons of wheat from the 2016/17 campaign. (Notícias Agrícolas)

The Uruguay Crop Report

“With a beginning to the new year with excessive rainfall that few expected, Uruguay soybean producers were able to close deals in the range of US$380-382 per ton,” writes FarmsUY co-founder Eduardo Blasina in a special report for El Observador. “The main driving factor is the amount of speculation over how much production could be lost in Argentina due to flooding in the main growing nucleus and, to a lesser extent, the water deficit in southeastern Buenos Aires Province and La Pampa. Even though forecast models are suggesting relief for the areas most affected by excess rainfall, the market remained firm this week with Uruguay soybean prices at their highest levels in six months. Looking beyond Argentina, there was growing concern this week over a potential trucking strike in Brazil, but that threat has cooled in recent days. The most skeptical analysts in the region still remember what happened last year when it rained the entire month of April. Despite that record rainfall, production did not drop significantly. In contrast to this year, the 2016 deluge took place much closer to harvest time, and in the areas that were not impacted by rain, yields were very high.” (Blasina/El Observador)

Soybean production in Uruguay and Paraguay this year should help compensate for potential losses in Argentina, according to a report from Globo Rural. Despite growing concern over crop damage in Argentina, some analysts are betting that the losses will be mitigated by soybean production in neighboring Uruguay and Paraguay, as both countries are forecasting record production levels for the 2016/17 campaign. The Association of Oil and Grain Exporters of Paraguay is projecting total production in the current cycle of 9.3 million tons of soybeans, or 13% more than the previous record registered in the 2012/13 campaign. And for Uruguay, analyst Michael Codonnier tells Globo that the soybean harvest should top 3.5 million tons, which would be a record for Uruguay as well. The abundant harvest for both South American countries, which together represent 4% of the world supply, “could help alleviate the worries many have about the current soybean crop in Argentina,” says British research group AHDB. (Globo Rural)

A new administration takes office in Washington on Friday, but that is not expected to impact the anticipated approval of Uruguay bone-in sheepmeat exports to the United States. In a radio interview with Ricardo Sosa, SUL analyst Jorge Bonino said: “If there are no political hurdles, we have high expectations. We have the good fortune that the sanitary inspection officials who have been following the process and performed the risk analysis will continue in their positions under the new administration. We are just waiting for the authorization to begin entering and exploring the market,” said Bonino. In related export news, Bonino said both public and private institutions are working to establish a new department to oversee the export of Uruguay cattle genetics abroad, specifically semen and embryos. The location of the facility has already been determined and the process of selecting animals for the program will begin shortly.  (The South America Cattle Report)

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