The South America Crop Report for March 20, 2017

By Patrick Archer and Eduardo Blasina


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The Argentina Crop Report

US$1 = 15.5502 ARS

With a 2016/17 crop estimated at 120 million tons, considering all grains, some futures markets in Argentina, such as MATBA (Buenos Aires) and ROFEX (Rosario – Santa Fe), are betting the total volume traded could exceed 50 million tons next year. So far, the local record for trading operations with grain futures was in 2012, with 44.5 million tons traded. Last year, the volume reached just over 32.6 million tons between both markets. Now, with the new policies benefiting the agricultural sector and greater coordination between the two markets, the consensus bet is that trading activity will grow between 20% to 25% annually, that is, about 10 to 15 million tons per year, as calculated the president of ROFEX, Andrés Ponte, in an interview with the newspaper El Cronista. MATBA’s president, Marcos Hermansson, agreed with the estimate and added that the growth of the local agricultural crop comes after the end of Argentina’s export duties on corn and wheat and the opening of new markets. (Noticias Agrícolas)

Argentina wheat exports climbed 133% in 2016 over 2015 to 9.9 million tons, after the elimination of taxes and restrictions on grain exports, according to new data from the Ministry of Agroindustry. In the first year of the new government, corn exports rose 41% YOY to 23.6 million tons, according to the report. The figures are somewhat ahead of the US Department of Agriculture (USDA) estimate that Argentina would export 21.7 million tons of corn and 9.6 million tons of wheat by 2016. For the current 2016/17 cycle, the government estimates that the Argentina wheat crop will grow to 18.4 million tons, up from 11.3 million in the previous cycle, while corn production should reach 44.5 million tons vs. 39.8 million tons in the 2015/16 campaign. With respect to soybeans, Argentina’s exports fell 21.4% last year to 9 million tons, according to the official report. Last week, the USDA predicted that Argentina will export 25.5 million tons of corn, 10.1 million tons of wheat and 9 million tons of soybeans in the 2016/17 cycle. (elEconomista)

John Deere Argentina celebrated the opening of a new tractor plant this week in Santa Fe. The John Deere tractor factory at Granadero Baigorria is where the multinational will manufacture the new line of 6J equipment, which includes six models ranging from 110 to 205 HP. In a strong industrialist tone, the Governor of Santa Fe insisted that the good old days can be recovered “to open the economy to the world but taking care of what we have and helping it grow,” referring to the need to care of the industrial fabric in the country and in Santa Fe. “John Deere grew to have 2,500 workers in the glorious times of national industry, and I think we can recover those times,” said Governor Lifschitz who stressed the social responsibility of the company that employs 850 workers at the plant. The multinational’s staff, led by global CEO Samuel Allen and JD Argentina’s Gastón Trajtenberg, were at the launch of the new tractor which is manufactured in Granadero Baigorria. The new plant, which cost an estimated US$45 million according to Maquinac, can produce a total of 4 tractors per day. (La Capital)


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The Brazil Crop Report

US$1 = 3.1172 BRL

The size of the soybean crop in South America begins to weigh on the assessment of the Chicago market. Record production forecasts in Brazil and Argentina led soybeans to record the lowest prices of the year in the May contract, according to Daniele Siqueira of AgRural. Brazil is the second largest soybean producer in the world followed by Argentina. The United States is the world’s leading producer of soybeans. The May contract moved to a low of $ 9.92 a bushel on Tuesday, ending the trading session at $ 9.9925. Soybeans were already operating under a bearish scenario last week, triggered by price retreats in other commodities such as oil. The decline in soybean prices is not good news for Brazilian producers, mainly because only 43% of the 2016/17 harvest was sold in advance. By contrast, the average rate sold over the last five years is 54%, according to AgRural. (Portos e Navios)

Rabobank, one of the largest commodity banks in the world, reported that Brazil’s 2017/18 coffee crop should total 49.2 million 60-kg bags (12.5 million bags of robust coffee and 36.7 million bags of Arabica bags), writes Cafeicultura’s Jhonatas Simião. The information is from the Dow Jones Newswires financial news agency. Given this new data, the Dutch bank believes that the country will have its smallest production cycle in the Arabica coffee crop in two years. Rabobank says Brazil’s Robusta production will also be lower this year due to the weather in Espírito Santo, the largest producing state of the variety. In its latest estimate, Brazil’s National Supply Company (CONAB) pointed out that the country’s harvest should be between 43.65 and 47.51 million bags, in addition to the Arabica and Robusta varieites. According to the study, the forecast represents a reduction between 7.5% and 15% when compared to the production of 51.37 million bags in the previous cycle. (Cafeicultura)

Famous worldwide and primarily in the US and the UK, the popular breakfast cereal Cheerios finally arrived in Brazil this week. Manufactured by General Mills and marketed under the Nestlé brand, Cheerios combines four whole grains (corn, wheat, rice and oats) with honey flavor. The brand has existed for 74 years and is now sold in 45 countries. Being more natural, Cheerios appeals mainly to consumers who are looking for a healthier option for breakfast, writes EXAME’s Guilherme Dearo. The product can already be found in São Paulo at the Pão de Açúcar and Extra supermarkets. In April, it will be on the shelves of markets in the State of São Paulo and the southern region. The packaging design highlights the presence of honey and four different cereals in vibrant colors. (EXAME)

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The Uruguay Crop Report

US$1 = 28.2100 UYU


Analysts from the Directorate of Agricultural Services of Uruguay’s Ministry of Livestock, Agriculture and Fisheries (MGAP) met Thursday with the board of the Rural Association of Soriano. One of the central aspects of the meeting was the role of producers in complying with the protocol of exporting soybeans to China, writes FarmsUY co-founder Eduardo Blasina. The new protocol already agreed to and signed with China establishes zero tolerance to other seeds in soybean shipments. The aim is to find a way to mitigate the risk of pests such as Aleppo sorghum at the time of harvest. “Aleppo sorghum is included within a set of other weeds,” said Rural Weather Exchange Director General Agricultural Services Federico Montes. “What we are trying to do is a systematic and logical process of certification. This means that from the time of harvest until it reaches the ship, we have a series of control points that give guarantees of our process and minimize the risks, “said the leader. (Blasina & Associates)

Satellite monitoring of the application of agrochemicals will be mandatory as of June 1st, with an additional 90 days for its implementation, write El Observador’s Juan Samuelle and Pedro Silva in a special report from Soriano.  The information comes from the Director of Agricultural Services of the Ministry of Livestock, Agriculture and Fisheries ( MGAP), Federico Montes. The new initiative will be announced next Saturday at 10:30 am at Uruguay’s Annual Farming Expo, Expoactiva. The director of Agricultural Services says the Saturday session will lay out “the main characteristics of satellite monitoring” as well as introduce the companies that provide the monitoring device. A 90-day compliance window will also begin June 1st. With the implementation of satellite monitoring of agrochemical applications in Uruguay, Montes said there is “a macro objective to ensure the safety and use of agrochemicals” in production, as well as to highlight “good agricultural practices nationwide” (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)

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-Patrick Archer

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