The South America Crop Report for February 13, 2017

By Patrick Archer and Eduardo Blasina


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The Argentina Crop Report

US$1 = 15.5334 ARS

The USDA lowered its projections for global soybean, corn and wheat end stocks in the 2016/17 cycle, and Argentina played a significant role in the downward revision. Producers in Santa Fe Province have lost over 400,000 acres of soybeans, according to InfoCampo. The USDA slashed its forecast for Argentina soybean production to 55.5 million tons vs. 57 MT just last month. The report maintained the forecast of 9 million tons of soybean exports for Argentina, the world’s third largest provider of the oilseed. The Rosario Grains Exchange went even further than the USDA and reduced its projection to 54.5 million tons, while reaffirming its previous forecast of 36.5 million tons of corn in the 2016/17 campaign. The USDA also reaffirmed its projection of 25 million tons of corn exports for Argentina in the current cycle. The USDA lowered its forecasts for global end stocks of soybeans (82.32 to 80.38 MT), wheat (253.29 to 248.61 MT) and corn (220.98 to 217.56 MT), while raising the forecast for Chinese corn demand from 227 to 231 million tons. (El Cronista)

In the coming days, the government of Argentina is going to roll out a National Irrigation Plan which seeks to attract an estimated US$1.2 billion, according to La Nación. A total of 53 regions in 17 Argentine provinces were analyzed for the project which ultimately chose 4 regions in 4 provinces for the first phase on the national plan which will promote the irrigation of 255,000 hectares (630,000 acre) of Argentina farmland for grain, meat and fruit production. The World Bank plan is similar to other projects carried out in Peru (140,000 hectares) and Nebraska where there are 90,000 productive systems adding an estimated value of US$3.6 billion to U.S. production. Argentina has the potential to add irrigation to 6.9 million hectares of land, but only 1.6 million hectares are currently irrigated, according to a report from UCAR. Interested investors include both national companies like Cresud and foreign groups including an unnamed Chinese group that has applied irrigation to 9,000 acres of land in Brazil. (InfoCampo)

Sales of farm equipment and machinery in Argentina rose by triple digits in the fourth quarter of 2016, according to a new report from the National Institute of Statistics & Census (INDEC). Fourth quarter sales of farm equipment totaled over US$440 million, a 131% increase over 4Q15 which is not surprising considering that 2015 was the worst year in history for sales of such equipment. Sales of harvesters posted the largest gains rising 228% in revenue and 157% in units sold. The US$137 million in harvesters accounted for 31% of all sales in the fourth quarter. Seeders and tractors ranked second and third in terms of revenue sold with gains of 126% and 88%, respectively. While domestic producers showed modest gains, sales of imported farm equipment surged across categories including harvesters (+335%) and tractors (+485%). (Mendoza Opina)


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The Brazil Crop Report

US$1 = 3.1172 BRL

Brazil’s National Supply Company (CONAB) is forecasting record soybean and corn harvests for the 2016/17 campaign and raising the already robust January estimates thanks to favorable climate conditions in most of the country’s growing regions. Brazil’s 2016/17 soybean harvest was raised from 103.8 million tons to 105.6 million tons, compared to 95.4 million tons in the 2015/16 campaign. With 10% of the national soybean harvest complete, there are indications that total production could be revised even higher. In Mato Grosso, where harvest activities are pretty far along, CONAB is projecting record production of over 30 million tons. The CONAB projection for 2016/17 corn production was also raised from 84.5 to 87.4 million tons compared which would break the previous record of 84.7 million tons set in 2014/15. (Folha de S.Paulo)

Brazil soybean exports are expected to top 57.5 million tons in the 2016/17 campaign, a 10% increase over the 2015/16 cycle according to the new Brazil supply and demand report from SAFRAS & Mercado. Brazil total soybean production is forecast to rise 12% this year to 109.947 million tons, and final stocks are forecast to rise 215% from 2.652 million tons to 8.347 million tons. SAFRAS is forecasting soybean meal production will rise 2% to 31.18 million tons, and exports will rise 9% to 15.5 million tons. Brazil soybean oil production is expected to reach 8.12 million tons. SAFRAS estimates 6.85 million tons of soybean oil will be consumed domestically, 2.65 million tons will be used for biodiesel, and 1.4 million tons will be exported. (Pork World)

This week a Russian trade mission was confirmed for March to approve more Brazil meatpackers for meat exports. Russia is already one of the most important buyers of beef from the Brazilian State of Mato Grosso. In 2016 alone, Mato Grosso plants exported 28,200 tons of beef to Russia. The upcoming visit by the Russian delegation was announced by Ministry of Agriculture executive secretary Eumar Novacki during his visit to Moscow last week. During his meetings with Russian authorities, conversations advanced regarding the increased export of Brazilian dairy products, pork and poultry to Russia and the import of more Russian fertilizers in Brazil. In another meeting with Russian Vice-Minister of Agriculture Evgeny Gromyki, Novacki expressed Brazil’s interest in importing wheat from Russia. The topic was added to the agenda for the upcoming meeting of the Russia-Brazil Intergovernmental Commission in Brasilia. (Olhar Direto)


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The Uruguay Crop Report

US$1 = 28.6249 UYU

Uruguay crops are developing under excellent conditions, and all indications are for a strong summer harvest, writes FarmsUY co-founder Eduardo Blasina in a special report for El Observador. “Soybean prices in Uruguay rose this week allowing local producers to sell in the range of US$375 per ton, while the price of wheat at the Port of Nueva Palmira was US$160 per ton. Locally, the most important number from this week’s USDA supply and demand report was the reduction of end stocks for wheat both in the United States and globally. With an expected increase in U.S. wheat exports, end stocks were reduced 4% to 31 million tons, while global stocks were lowered 1% to 250.7 million tons. Local producers will be keeping a close eye on wheat prices, as a price increase could boost the total planting area this year in Uruguay after five consecutive years of decreases.” (El Observador)

With rice production recovering in Brazil and increasing in the U.S., Thailand and Vietnam, Uruguay will have to compete relying on its traditional tools of high yields and differentiation. Global rice stocks will increase considering the gap between global supply of 480 million tons and global demand of 475 million tons. Despite heavy rains this summer, Uruguay rice producers are expecting average production of 8,000 kilos per hectare this year, a significant improvement over last year when thousands of acres were left submerged by April flooding. Uruguay continues to be a leader in genetics with varieties like El Paso 144 which has been adopted throughout the region over the past thirty years. While the Iranians prefer to buy El Paso 144, the Peruvians have a preference for our Tacuarí variety, while the Brazilians have a preference for Olimar, according to the Uruguay Rice Growers Association (ACA) which celebrates its 70th anniversary this week. (El Observador)

Uruguay could double beef exports to Russia in the second half of the year thanks to a high-quality beef protocol approved in late 2015.  The measure will allow Uruguay to export prime cuts to Russia from Uruguay grass-fed animals for a 15% tariff. Russia was one of the top purchasers of Uruguay beef between 2004 and 2011, but the economy began to decline with the collapse of oil prices and the devaluation of the ruble. Now that the ruble is regaining strength, beef exports to Russia are expected to rise. Uruguay and other South American beef exporters are all looking to close deals at this week’s 24th annual Prodexpo in Moscow, the most important food and beverage expo in Russia. Uruguay’s booth at this year’s Prodexpo (Photo) is a 2,100 square foot, two-story showcase with two VIP rooms for meetings with Russian buyers, according to the National Meat Institute. (The South America Cattle Report)

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-Patrick Archer

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