The South America Crop Report for March 6, 2017
By Patrick Archer and Eduardo Blasina
The Argentina Crop Report
Argentina’s current soybean crop is in good shape in most of the country’s key growing regions, according to the weekly report from the Buenos Aires Grains Exchange (BCBA). “The weather over the past week again supported humidity of the soybeans planted in the central and southern growing regions and greatly improving the affected region of southeastern Buenos Aires Province. As for progress, the bulk of first harvest soybeans are in the reproductive phase between R3 and R6, while the majority of second harvest beans are now between R2 and R4. The BCBA reiterated its forecast for average yields which would translate into total production of 54.8 million tons of soybeans in the 2016/17 campaign, or 2.1% below the 56 MT harvested in 2015/16. The BCBA is forecasting Argentina 2016/17 corn production will top 37 million tons, up 37% from last year’s 30.0 MT. (InfoCampo)
This week Argentina’s largest producer of sugar and paper, Ledesma, signed a memorandum of understanding with Mitsui Argentina, the local subsidiary of Japan’s Mitsui & Co., to develop “integral collaboration” here in Argentina and worldwide. Mitsui made its interest in Argentina known last year when it agreed to buy 400,000 tons of soybean meal from Santa Fe’s Vicentin, writes El Cronista’s Manuel Parera. Mitsui has radically changed its business model over the past decade investing heavily in different sectors and countries including US$6 billion in Brazil, US$4 billion in Chile and US$1 billion in Mexico in areas including agribusiness, energy, food, gas distribution, IT solutions and transportation. Mitsui now has 138 offices in 65 counties worldwide. In addition to paper and sugar, Ledesma produces bio-ethanol, fruits and juices, beef and grains. (El Cronista)
Argentina agricultural exports rose in the first eleven months of 2016 to US$35.24 billion, a 3.4% increase over the same eleven-month period in 2015, according to new numbers from the Ministry of Agroindustry. The pro-farming measures of the new administration helped the country achieve 2016 records in the harvest of grains, the production of bio-ethanol and biodiesel, the sale of farm equipment, the sale of fertilizers, and the opening of new export markets. The Ministry says agro-industrial exports represented 65% of all products Argentina exported last year. A total of 40 Argentina agricultural products gained entry to 22 new international markets including beef in Canada and the Philippines, barley in the UAE, tobacco in Romania, and chickpeas in the United Kingdom. The Ministry credits the increases in Argentina’s wheat and corn planting areas in 2016, up 44% and 5% respectively over the previous campaign. (Diario Express)
The Brazil Crop Report
Brazil soybean exports broke the record for the month of February, according to the Foreign Trade Secretariat (SECEX). Brazil exported 3.51 million tons of soybeans in February, a 72% increase over February 2016 and almost four times the total exported in January of this year. The 4.4 million tons of soybeans Brazil has exported year-to-date is the most recorded since 2006 when SECEX began tracking the data. The agency says exports have been boosted by greater availability of the oilseed at the beginning of the harvest period. Soybean prices in Brazil piggybacked on Chicago’s gains this week. The price for available soybeans in Brazilian ports closed this week at R$72.50 in Paranaguá, R$73.50 in Rio Grande, R$73.00 in Santos, and R$72.50 in São Francisco do Sul. Brazilian market analyst Camilo Motter tells Notícias Agrícolas that sales will slow with the exchange rate approaching R$3.00. The current trajectory of the real against the dollar is making Brazil soybeans less competitive. (Notícias Agrícolas)
Brazil’s anticipated record corn harvest is welcome news for Zen-Noh, the federation of agricultural co-ops in Japan, which quietly entered the Brazilian market two years ago. “My feet are burning. We are now here, and there is already a record harvest,” said the president of Zen-Noh in Brazil, Ricor F. da Silveira. The federation was created after WWII and today unites over 1,000 Japanese co-ops with annual sales of US$50 billion, but the geographic limitations of Brazil forced Zen-Noh to expand globally. In its first Brazilian harvest last year, the company shipped 1 million tons of grains to Japan. “If the dollar goes to R$2.80 and the US crop [the largest corn producer] is a record…who knows how much we will ship? With the dollar above R$3.20, we will be more competitive, despite the logistics costs,” said the Zen-Noh president. (Portos e Navios)
An article that ran this week in The Guardian says an environmental group used satellite imagery and drones to allegedly show that Burger King is sourcing animal feed from deforested lands in Brazil and Bolivia. “The connections are pretty clear. Grain traders who source in Bolivia and the Cerrado of Brazil supply Burger King and other large seller of beef with grains. In comparison, McDonald’s, Subway and KFC aren’t perfect, but they are doing much more to protect the forests,” says Mighty Earth CEO Glenn Hurowitz. The Guardian says more than half of the natural vegetation in the Cerrado has been deforested compared to 25% in the Amazon region. In a written response to the paper, Cargill reaffirmed its commitment to reduce by half the number of incidents of deforestation in its supply chain between 2020 and 2030. (Jornal do Brasil)
The Uruguay Crop Report
Uruguay soybean producers are welcoming the lower temperatures and waiting for the forecast rainfall to offer some relief to the recent heatwave experienced in the closing days of February. The change in weather could improve average yields for the upcoming harvest. Prices for available soybeans moved in a tight range of US$370 to US$372 per ton this week at the Port of Nueva Palmira. In a radio interview this week with FarmsUY co-founder Eduardo Blasina, the director of the Compañía General del Término de Argentina and advisor to agribusiness leader ADP in Uruguay, Carlos Sánchez Negrete, said today’s soybean prices don’t correspond with current supply and demand variables. Negrete says commodities have much greater potential upside than stocks given the recent surge in the Dow since the election of Donald Trump. The full interview can be heard below.
Another factor that has supported soybean prices in recent sessions is the restriction of supply in South America, especially in Brazil, due to the strengthening of domestic currencies against the dollar, writes FarmsUY’s Eduardo Blasina. In Brazil this leads to prices in the Brazilian real lower than a year ago even though Chicago prices are at higher levels. Beyond logistic restrictions and delays due to rainfall, Brazilian production is all but assured with a floor of 104 million tons while the number for Argentina is between 54-55 million tons. At the end of last week, the USDA released preliminary projections on the area and production of major crops for 2017/2018. The USDA forecast an average price for soybeans at US$ 9.60 per bushel (US$352.7 per ton) compared with the estimated average US$ 9.50 per bushel (US$ 349.1 per ton) for 2016 / 2017. (Blasina & Associates)
The Uruguayan Ministry of Livestock, Agriculture and Fisheries (MGAP) said Wednesday that it will intensify phytosanitary controls on soybean crops to comply with protocols for access to China, the destination of the bulk of Uruguay production. “We have implemented stronger controls and worked closely with local producers who are following the protocol signed between Uruguay and China in 2016 to optimize the export of the product for animal consumption” said MGAP Agricultural Services Director Federico Montes. Montes says between 70 and 80 percent of Uruguay soybean production goes to China. “On the eve of this 2017 harvest, we need to put all of our efforts into achieving better results,” he said. (China.org.cn)
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