The Latin America Crop Report for July 24, 2017

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The Latin America Crop Report for July 24, 2017


By Patrick Archer – SVN | Saunders Real Estate

Argentina Crop News

Argentina’s 2016/17 soybean campaign will end falling 6.5% short of last year’s harvest. The final number of 55 million tons, down from the June forecast of 57 MT, is due to the lower-than-expected planting area (18m hectares / 44.4m acres) and climate issues, says the Ministry of Agroindustry’s monthly report. “The increase in corn planting area came at the expense of the soybean harvest, and excessive water in some key growing regions hurt planting area and yields for soybeans,” said Minister Ricardo Buryaile. A report earlier in the week estimated damage to 400,000 acres of soybeans nationwide. Local producers were selling soybeans this week in a range of $243 – $250 per ton. As for the 2017/18 wheat campaign which is well underway, the Ministry is standing by its forecast for 5.9 million hectares (14.5m acres) planted. The Ministry’s next report is due on August 24. (El Cronista

Argentina’s 2016/17 corn harvest of 39 million tons set an all-time record for the country, said Minister Buryaile at the inauguration of the 131rd Rural Expo this week in Buenos Aires. He also acknowledged the current challenges local producers are facing: “This is a very difficult year for Argentina production. We have 18 provinces in a state of emergency, millions of hectares underwater, and significant losses with a changing climate that has not stopped hammering producers. Despite these challenges, this year we will have record wheat production of 18.3 million tons, record corn production of 49 million tons, and the largest total harvest in our history: 137 million tons.” (InfoCampo


Brazil Crop News

Brazilian farmers are preparing for the largest soybean planting in the country’s history, according to a new Bloomberg poll of 11 grain analysts. The total area planted with soybeans in the 2017/18 campaign, which begins in September, should rise 2% to 34.5 million hectares (85.2 million acres). The majority of analysts said Brazilian producers will opt to plant soybeans over corn, especially in the southern growing regions. This will be a total reversal from last year when more producers ramped up corn plantings for the summer harvest. Local corn prices exploded last year after the drought conditions of the 2015/16 campaign. The increase in local corn planting last year resulted in this year’s record harvest and, as a result, final corn stocks will more than double compared to last year. (UOL/Bloomberg)

Grain prices paid to Brazilian producers are down 24% on average compared to one year ago, according to a national index. Released this week, the Rural Producer Price Index (IIPR) shows corn and soybean prices were the most negatively impacted over the past 12 months. And average prices paid to producers fell 15.4% during the first six months of 2017 with corn (-35%) and soybeans (-14%) down the most. The Producers’ Cost Inflation Index is also moving lower with agrochemicals posting the largest decrease in June followed by diesel and shipping costs. Brazilian producers can thank are more favorable exchange rate, as the dollar continues to move lower (Chart) against the real. (Canal Rural)


Chile Crop News

The recent freeze and record snowfall in the Southern/Central growing regions of Chile does not appear to have negatively impacted fruit production activity, according to the Chile Fruit Exporters Association (ASOEX). “It is still premature to make conclusions about any type of damage to fruit or plants; however, according to the land inspections completed by the research and professional teams of the major fruit growing and exporting companies, they have not encountered significant damage. While fruit damage from frost is not entirely observable immediately, we will continue to monitor the situation and deliver an update next week,” said ASOEX leader Ronald Brown. The main fruit crops currently growing in Chile are citrus and avocados. (Diario Financiero)

Chilean wine exports to Argentina have surged this year, a headline that is not sitting well with neighboring Argentine grape and wine producers that were just beginning to see some daylight after suffering from several years of losses and depressed prices. In the first five months of this year, wine imports to Argentina jumped 354% compared to the same five-month period in 2016, and Chilean wines dominated in all size categories. For premium bottled wines, 53% of Argentina’s imports came from Chile (followed by 23% from Spain), while in the bulk wine category, all of Argentina’s imports came from Chile. The report says Argentine grape and wine producers are requesting an emergency meeting with the Ag Ministry to complain and demand the restriction of wine imports, especially from Chile. (Nueva Rioja)  


Mexico Crop News

This week Monsanto announced it will invest 3 billion pesos (US$170 million) in Mexico over the next five years to advance its R&D efforts in the country, according to El Universal. With annual revenue in Mexico of over US$500 million, the company intends to grow annual revenue between 3 and 4% while expanding its planting footprint of transgenics and hybrids by another 2.5 million acres of Mexican farms. The company’s director for Latin America, Manuel Bravo, says he wants local producers to be able to increase their production from one ton per hectare to “five or six tons.” Monsanto has 750 employees in Mexico and the country serves as its base for operations in Central America, the Caribbean, and the Andean region of South America. (El Universal)

A new chapter in Mexico’s “Plan B” import substitution policy to reduce U.S. dependence was announced this week: Mexico will begin importing lemons grown in Argentina for the first time in history. The wheels were set in motion last July when Mexican president Enrique Peña Nieto visited Argentina, and now the goal is to expand beyond lemons to other products grown in Argentina including citrus, cherries, blueberries, wheat, and beef. Argentina will take the first step by exporting 10,000 tons of lemons to Mexico worth roughly US$12 million. According to the USDA, Mexico producers 2.27 million tons of limes and lemons annually, although 90% of that production is from limes. Historically, Mexico has imported most of its lemons from California. (La Nación


Uruguay Crop News

China’s announcement this week of 6.9% economic growth was good news for Uruguay which relies heavily on exports to the Asian country. China has been the number one importer of Uruguay beef since 2013, and the Chinese purchased US$540 million of Uruguay beef in 2016, roughly one-third of all Uruguay beef exports. China is also a top destination for Uruguay’s other main exports: cellulose and soybeans. Of the US$1.22 billion in cellulose shipped from Uruguay’s free trade zones, China accounted for US$410 million of that total, while 65% of Uruguay’s soybean exports went to China as well. Added good news for Uruguay is the fact that exports year-to-date are US$350 million higher than during the same period in 2016. (Espectador)

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