The Buenos Aires Cereal Exchange released a new report yesterday (12.14) with updated crop conditions in Argentina. The soybean planting in the country is still delayed and reached 63.5% of the estimated surface of 44.7 million acres. The half of the remaining area is expected to be planted in the coming two weeks if the weather helps.
Recent rains have improved conditions, but they were still insufficient to generate a major work progress. The risk pointed out by the Buenos Aires Cereal Exchange is that a lot of the grain will be out of the commercial market. Compared to the same period of last year, there is a delay of three percentage points for soybeans.
In the case of corn, the works have advanced to 45.3% of the total surface of 13.3 million acres. The weather has been a worry for crops in the Northern provinces of Chaco and Salta.
After the United States has decided to impose duties on Argentinian biodiesel as anti-dumping measures, Argentina reacted changing its tax structure for biofuels. In August, the U.S. issued duties of 57% against the Argentinian product. In October, the rate was increased to 72.28%.
The Argentinian export tax structure had a lower rate for biodiesel than for soybean oil. In June, the export tax on biodiesel was zeroed, while the export tax for soybean oil was rated at 27%. These differences were interpreted by the U.S. government as an incentive for biodiesel and an unfair competition. Starting in January of 2018, the rate will be unified at 8%.
In 2014, Argentina exported 170,000 tons of biodiesel to the United States. The volume exported jumped to 1.5 million metric tons last year or US$ 1.2 billion. Argentinian authorities expect a new gesture from the U.S. government with the change.
Argentina’s annual biodiesel production is 2.2 million metric tons, being 1.1 million metric tons sold in the domestic market. The processing capacity installed in the country is 4.5 million metric tons.
The Mato Grosso Institute of Agricultural Economics (Imea) revealed this week that soybean sales advanced 5.8 percentage points to 38.6% of the total production estimated.
Though there were these recent strong commercial movement in the Brazilian state, the prices are below what they paid last year and sales are also slower than the previous season.
After seven years, Argentina is back again among the largest beef exporters in the world. According to the United States Department of Agriculture (USDA), last year the country exported 216,000 tons of beef. With this volume, Argentina was tenth in the ranking of largest exporters. The ninth position was held by Mexico that shipped 258,000 tons.
In its October report, the USDA has put Argentina and Mexico in a tie closing 2017 with 280,000 tons estimated to be shipped. On the other hand, data from the private sector in Argentina reveals that the sales of November and early December would already sum 300,000 tons, leaving Mexico falling behind. Of the 300,000 tons total exports, 46% are sent to China, 14% to Chile, and 11% to Germany.
In 2005, Argentina was the third largest beef exporter in the world with 770,000 tons sent that year. But exports taxes and temporary bans on exports left the country behind neighboring countries such as Brazil, Uruguay, and Paraguay.
Argentina expects to continue to have double-digit growth in 2018 with the possible opening of the U.S. market. Slaughtering this year in the South American country has grown 8.7% to 11.57 million heads.
Brazil’s National Supply Company (Conab) released this morning (12.12) a new report that foresees an overall drop of the country’s grain production of 4.7% compared to the previous season. The total grain production in the country is expected to fall to 237.7 million metric tons.
Considering soybeans alone, the output would fall from 114.1 million metric tons from the previous season to 109.2 million metric tons. In the meantime, total corn production is estimated at 92.2 million metric tons – five million metric tons less. The output harvested in the summer would be 25 million metric tons and the second crop would be about the same of last yera – around 67 million metric tons.
For Conab, the Brazilian soybean surface is expected to increase by 3.1% to 86.4 million acres, but the production would be lower because of lower yields. The corn area would drop 9.6%, which is a reduction of 1.3 million acres.
Raw cotton production is expected to reach 1.7 million metric tons this year, jumping 10.5% compared to the previous season. The rice output is expected to reduce by 5.8% to 11.6 million metric tons.
Pablo Adreani, an Argentinian analyst at AgriPac, a consultancy from Córdoba, affirmed this weekend that the remaning acres that need to be planted in Argentina are threatened by the lack of rain. According to the Buenos Aires Cereal Exchange, soybean sowing reached 53% of the estimated surface and the planting of corn got to 4o% of the projected area. The weather forecast there will be no rain in most Argentinian regions in the last 15 days of December.
“This week, if there is not important rains, there will be only two weeks in which we could plant. This situation is extraordinary and could be a lethal factor to the market”, said Pablo Adreani in his column at Buenos AIres prominent newspaper La Nación. One of the exceptions is the region of Rio Cuarto, Córdoba, which will have some precipitation in the last days of the year, according to the current weather forecast. “We are in a full weather market and, if there no miracle, we will see a brand new situation in the country. Nearly 50% of the hectares planted in the summer are at stake,” reads his column.
Pablo Adreani yet forecasts that there will be a strong volatility in the market in the coming days. “There is no doubt that we will have from now one of the most volatile and extraordinary markets, which would be impossible to foresse prices. While that happens, the farmer continues to be ‘sat’ on soybeans,” said the analyst referring to the 12 million metric tons of soybeans stocks in Argentina. Farmers await for a gradual reduction of soybean taxes in the coming year to sell.
A new report from the Buenos Aires Cereal Exchange reveals that the works of soybean planting advanced 10 percentage points in one week. The total estimated surface to be planted is 44.7 million acres and 53.2% of this area was reached by planters. It is a delay of 4.4 percentage points compared to the previous year crop. In the northeastern parts of the country, the works still lag behind, while the Northwest is about to start.
In the case of corn, planting has reached 40.4% of a surface of 13.3 million acres, while the sunflower planting is about to finish with 98.1% of the total area implemented.
The Monetary Policy Committee of the Brazilian Central Bank had its monthly meeting yesterday and decided to cut interest rates by 0.5 percentage points. The reference rates are now 7% a year and the lowest level in history.
The reduction was the tenth consecutive in the year, after a drastic reduction of inflation. Inflation target was 4% a year, but now the inflation rate is nearly 2.7%. Most analysts already expected the interest rates cut.
The third quarter was not good for Brazilian agriculture, but the accumulated activity shows a growth in 2016. That is what official data revealed yesterday (12.04).
The Brazilian National Institute of Geography and Statistics (IBGE) data says that from July to September there was a 3% retraction of Brazilian agricultural gross domestic product compared to the previous three months. However, if the values are compared to the third quarter of 2016, there was a growth of 9.1%. The Brazilian farm GDP accounted R$ 70.3 billion in the period.
The accumulated value of Brazilian farm products in the first nine months of 2017 was 14.6% higher than the same period of the previous year.
The lower than average rains that are forecast for the first half of December would create difficult to progress with corn and soybean planting in Argentina. After a first half of the year with abundant rains, the spring had low precipitation in the South American country. This weather pattern affects mostly the late-planting fields.
“It is going to rain below the average in this first half of December. It could be very critical for late planting”, said Germán Heinzenknecht, a meteorologist at Climatologia Aplicada consultancy.
The most recent report of the Buenos Aires Cereal Exchange said that the planting advanced to 34% of the surface in the case of soybeans and 35.8% in the case of corn.