The South America Crop Report for March 13, 2017

By Patrick Archer and Eduardo Blasina


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The Argentina Crop Report

US$1 = 15.4735 ARS

Argentina’s 2016/17 soybean production forecast was raised this week to 56 million tons by the Rosario Grains Exchange (BCR) on better-than-expected yields. “After many difficulties in January, a scenario of higher productivity returns. The thermo-hydraulic stress we saw from January to the third week of February last year did not make a much-feared return in the 2016/17 campaign. Areas unaffected by excessive rainfall are approaching the highest historical yields and should help compensate for surface reductions,” says the BCR’s report which raised the forecast for 2016/17 soybean production by 1.5 million tons over the previous forecast. Considering the adjustments in the different areas, the average yield nationwide is now 30.7 quintals per hectare (45.6 bushels/acre) compared to the previous forecast of 29.9 qq/ha. In terms of provincial yields, the BCR is estimating 36.2 qq/ha for Santa Fe compared to 37.6 last year, while the Province of Buenos Aires should see average yields of 30.6 qq/ha vs. 29.4 last year. (InfoCampo)

Expoagro, Argentina’s largest farming expo is taking place this week, and representatives of the world’s largest farm equipment manufacturers are all participating. Today La Nación features an interview with Fernán Zampiero, the General Manager for John Deere who shared his outlook for Argentina: “We have high expectations which is reflected in the investments we are making. With a farming sector that now has clear rules, there is more of a long-term vision. Today we have a good harvest in the ports, good credit availability, and we are finally breathing an air of optimism in the country.” In terms of what local producers are demanding, Zampiero says John Deere’s emphasis is on making up for the supply shortage during the past few years when Argentina demand was also very depressed. In contrast, this year the company is seeing solid growth in sales of both tractors and harvesters in Argentina. (La Nación)

This week Egypt, the world’s largest importer of wheat, rejected a shipment of wheat from Argentina and two from Russia. The three shipments purchased in local auctions were rejected by Egyptian inspectors, according to Reuters. Intermediaries consulted would not specify what Egypt’s concerns were with the wheat quality, but Egypt has requested that all three companies replace the rejected shipments which total around 180,000 tons of wheat. Sailing data shows that a ship loaded with 63,000 tons of wheat in the Argentine port of Bahía Blanca was diverted to Morocco. The news comes as a shock to the local market which sent the first shipment of 60,000 tons of Argentine wheat to Egypt in January 2016 arranged by Louis Dreyfuss after more than three years without wheat sales to the African nation. Shipping to destinations like Egypt is very complex with added freight costs of roughly US$20 per ton to North Africa and US$30 per ton to Asia. (Diario BAE


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The Brazil Crop Report

US$1 = 3.1462 BRL

This week the USDA raised its forecast for 2016/17 Brazil soybean production. In the monthly supply and demand report, the USDA said Brazilian producers should harvest 108 million tons of soybeans which is a 4 million ton increase over the February forecast of 104 million tons. The consensus estimate by analysts consulted by The Wall Street Journal was 106 million tons. The USDA’s new number is even higher than the 107.6 million tons of soybeans forecast by Brazil’s National Supply Company (CONAB). If Brazil hits the 108 million ton number this year, it will represent a 12% increase over the 96.5 million tons Brazil produced in the 2015/16 campaign. In the same report, the USDA also raised its forecast for 2016/17 Brazil corn production from 86.5 million tons to 91.5 million tons, while the analysts are forecasting 87.6 MT. (EXAME)

Wheat production in the Brazilian State of São Paulo (SP) has risen 200% over the past four years, according to a new report shared at this week’s Wheat Sector Chamber (CST) meeting at the Agronomy Institute in Campinas. Since 2013, SP wheat production has climbed 200% thanks to a combination of new technology and a 40% increase in planting area. “The wheat harvest in SP keeps growing. This demonstrates the varieties and technologies being used in the fields are yielding results,” said CST president Maurício Ghiraldelli adding that São Paulo still has room to improve considering it consumes the most wheat of any state in the country, yet only accounts for 10% of the national production. At the same meeting, analysts presented their forecast for the 2017/18 wheat harvest in São Paulo which include a reduction of total planting area but a production estimate (270,000 tons) similar to last year thanks to much better climate conditions. (Grupo Cultivar)

The majority of Brazilian beers, the most consumed alcoholic beverage in the South American country, are produced with GM corn. The local beer industry takes advantage of legislation which doesn’t require special labeling or “malted cereals” in the production. As a result, 16 of Brazil’s leading brands use GM corn in the brewing process, and consumers are unaware of the ingredients. A study of 77 beers in Brazil (49 domestics and 28 imports) by the University of São Paulo found that only 21 could actually be classified as “pure malt” beers using barley instead of corn. Among the national beers, GM corn was detected in the composition of 16 brands in quantities equal to at least 50% of the mix of other cereals including barley. By some estimates, 80% of the corn harvested in Brazil is GM corn, according to researchers. (Pragmatismo Politico)

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The Uruguay Crop Report

US$1 = 28.4000 UYU


“In what is typically the worst pricing moment for soybeans in a normal year, the helping hand of funds intervened with a three-way boost to commodity prices for construction metals, crude and soybeans all together,” writes FarmsUY co-founder Eduardo Blasina in a special report for El Observador. Trump’s ideas of increasing U.S. public spending are encouraging the funds to protect against inflation, and soybeans have been one of the instruments where they have chosen to take cover. The avatars and political turbulence between the US and China, paradoxically, are accompanied by a higher level of soybean shipments from the US to China, around 10% compared to the same period last year. In fact, soybeans prices have come up compared to a year ago, at around fifty dollars per ton, which represents a 15% improvement in the value of the oilseed crop compared to March 2016. This week in Uruguay soybean prices were hovering around US$360 per ton at the Port of Nueva Palmira. (El Observador)

The importance of Uruguay timberland and industry exports continues to grow with each passing year, as timber-related exports accounted for 18% of all Uruguay exports in 2016, according to new numbers from Uruguay XXI. In fact, Uruguay exports of wood and wood derivatives including cellulose, paper, plywood and cardboard topped US$1.535 billion last year, writes El Observador’s Juan Samuelle. Revenue from Uruguay timber exports has risen 44% since 2010 when Uruguay exported US$1.064 billion in wood and derivatives. The new Uruguay XXI report, “Forestry Sector Investment Opportunities” emphasizes that construction of the third pulp mill, whose capacity will be similar to the first two operating in the country, will catapult Uruguay into second place in the ranking of the world’s largest exporters of cellulose fiber right behind Brazil. Contact us below to request the full report. (El Observador)

As we predicted last month, Uruguay total cattle slaughter for the month of February shattered the old record and reached 198,445 head. The total heifer number, 102,997, also set a new record for February and represented 52% of the total monthly slaughter. Total weekly cattle slaughter for the week ended March 4 was 46,677 head, or 6% lower than the week prior and 16% higher than the same week in 2016. Heifers represented 50.1% of the total with 23,391 head, which is also 6% below last week and 10% above the same week last year. Weekly cattle slaughter activity by plant was again led by Breeders & Packers Uruguay (BPU) with 4,159 head followed by Frigorifico Las Piedras with 3,946 animals and Tacuarembó with 3,668 head. (The South America Cattle Report)


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-Patrick Archer

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