The Latin America Crop Report for June 26, 2017

 

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The Latin America Crop Report for June 26, 2017

By Patrick Archer – SVN | Saunders Real Estate

 

Argentina Crop News

 

Forex settlements in the Argentina agriculture export sector are down 13.5% YTD compared to the same period in 2016, according to the country’s Oilseed Industry Chamber (CIARA) and Grain Export Center (CEC). Those two entities, which together account for one-third of Argentina’s exports, said ag export payments YTD are US$10.591 billion vs. US$12.251 billion one year ago. Convinced that current prices are too low, Argentine producers are very reluctant to sell their soybeans. “For now, I understand that exporters are fulfilling existing orders, but if this local retention of soybeans continues, it could very well stimulate a rise in global prices,” says CIARA-CEC spokesman Andrés Alcaraz which represents exporters like Bunge and Cargill. It’s a similar situation in Brazil where producers have only sold 58% of their soybean production compared to 76% this time last year. (Revista Chacra)

The purchasing power of grains has fallen in Argentina along with commodity prices over the past year, according to a new report from the Cordoba Grains Exchange (BCCBA). Corn and sorghum have been the most negatively impacted with average declines of 39% and 34%, respectively. “During the past year, the price of available grains in Rosario have pulled back due primarily to excess global supply. As a result, compared to June 2016, corn has lost US$61 per ton, sorghum US$45, soybeans US$50 and wheat US$15.  Despite the recent decline, the BCCBA says the status quo is much better than prior to December 2015 under the export tax regime of the Kirchner administration. Prior to December 2015, Argentine wheat producers received on average 70% of the price quoted in Chicago, but today that price difference is practically zero, according to InfoCampo. (InfoCampo)

Brazil Crop News

 

China’s soybean imports have tripled over the past decade to 93 million tons, while global soybean plantings over the next decade are forecast to exceed 2.4 billion acres. These are some of the eye-opening numbers shared in a must-read Folha de S.Paulo analysis this morning titled “Chinese Appetite for Meat Changes Soybean Planting Around the World.” The article starts at the peak of soybean season in North Dakota, winds south to Mato Grosso where producers in new Land Rovers communicate via WhatsApp, and heads east to China’s first KFC in Xangai and a $250 million Cargill plant in Anhui capable of processing 65 million chickens a year. Since 1989 when that first KFC opened, Chinese meat consumption per capita has almost tripled from 44 to 110 pounds per year. And that trend will only continue as more Chinese consumers move to urban areas at an amazing rate of 20 million per year. (Folha de S.Paulo)

Brazil’s second harvest corn season is forecast to reach a record 63.5 million tons this year, a 56% increase over last season, according to new numbers from the National Supply Company (CONAB). The surge can be attributed to production increases in the two states that together account for 60% of all second harvest corn, Mato Grosso and Paraná. CONAB says an 18% planting increase coupled with favorable climate conditions should yield a 68% production increase in Mato Grosso, while Paraná should see a more moderate 18% increase to 13.3 million tons. In closing, Canal Rural suggests producers who are holding on to their corn should keep in mind the record harvest in Brazil and rapid acceleration of harvest activity which will increase available supply and exert downward pressure on prices. (Canal Rural)

Chile Crop News

 

Chile’s fruit sector production is forecast to grow 4% in the 2017/18 season with hazelnuts, cherries, citrus, avocados and blueberries among the top five products, according to a new report from the National Agriculture Society (SNA). The first shipments of Chilean cherries to South Korea during this period. “The Asian market is very important to us. It is a growing market that pays for quality,” says Marcelo Jeanneret of Green Valley Exporters. Among citrus, Jeanneret says mandarins will be the “star product” with prices already 20% higher than one year ago. Chilean blueberries are also expected to fare well in the export market considering the recent drop in Peruvian production. Chilean avocados, which local producers refer to as oro verde, are also poised to benefit from rising global demand, especially among what this Chilean site called “hipsters” who can’t live without their avocado toast and $30 avo-lattes. (Diario Financiero)

This month marks the 20th anniversary of the free trade agreement (TLC) signed between Chile and Canada, the first such deal that Chile signed with a developed nation, according to Diario Financiero. Trade between the two countries has tripled since the TLC’s signing, and continues to grow at an average annual rate of almost 6% reaching US$1.607 billion last year. Chilean exports to Canada have risen 800% over the period to US$968 million with gold, fresh grapes, wine, fresh blueberries and salmon filets among the biggest beneficiaries. In return, Chilean purchases of Canadian wheat, oils and medical supplies have risen significantly, as well as Canadian direct investment in Chile. Canada is now the third largest investor in Chile with over US$19 billion invested in a variety of sectors with mining topping the list. (Diario Financiero)

Mexico Crop News

 

US ag exports to Mexico have fallen during the first half of the year, as uncertainty grows over the future of NAFTA. During the first four months of 2017, Mexican imports of US soybean meal, used for poultry and cattle feed, have fallen 11%, the largest decline over that four-month period since 2003. US corn exports to Mexico fell 6% over the same period. Mexico is the United States’ top export market for both commodities. The numbers reflect the fact that Mexican companies are making more short-term purchases and simultaneously purchasing more from other countries like Brazil. “We are obviously concerned,” said Tom Sleight, president of the US Grains Council adding, “There is a palpable interest on the part of Mexico, I have heard that the Mexican people constantly refer to this as ‘Plan B,’ to reduce their dependence on the US for agricultural products and acquire them from other places.” (Tijuanotas)

The State of Sonora is the number one wheat producing state in Mexico. Sonora producers are expected to plant 717,000 acres of wheat in the 2016/17 campaign of which almost 92% was planted in southern Sonora in the Yaqui and Mayo valleys. Sonora offers local producers the best possible climate conditions, especially during the fall and winter, with a minimum of 750 hours of cold for wheat development. Over half of Sonora’s wheat is consumed domestically while 46% is exported to countries like Algeria, Chile, Guatemala, Peru and Venezuela. After Sonora, the top wheat producing states in Mexico are Baja California, Sinaloa, Guanajuato and Michoacán. The Secretariat of Agriculture (SAGARPA) says 97.2% of the 2016/17 wheat crop has been harvested with a total volume of 1.749 million tons and an average yield of 6.1 tons per acre. (AM de Querétaro)

Uruguay Crop News

 

This week Uruguay announced total soybean production for the 2016/17 soybean harvest, and it was another record year. Uruguay total soybean production for the just completed campaign reached an estimated 3.338 million tons, a 51% increase over the 2015/16 cycle and the highest total ever recorded by the South American country. The total area planted with soybeans was an estimated 1.1 million hectares (2.7 million acres) with an average yield of 3,026 kilograms per hectare (45 bushels/acre). The average yield, which was 56% higher than the average yield in 2015/16, also set a new record for Uruguay. The data was compiled by the Agricultural Statistics Agency (DIEA) through a series of phone interviews with producers during the first two weeks of June. The next DIEA report in July will include yields for all summer crops. (Espectador)

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