Brazil’s National Supply Company (Conab) has released a new report this Tuesday (09.12) and confirmed a record grain production of 238.7 million metric tons in the 2016/2017 season. The total output is 27.9 percent or 51 million metric tons higher than last year due to more favorable weather that generated higher yields.
The first crop finished with a total output of 30.46 million metric tons, while the second corn crop, that is about to finish harvest, is still estimated at 67.25 million metric tons. In the meantime, the total soybean production in the country was 114 million metric tons.
For wheat, there is an estimated production of 5.19 million metric tons, but there is still a lot to be harvested. For cotton, a harvest is near the end with an estimate of 1.53 million metric tons of cotton plume and 2.3 million metric tons of cotton core. In the season, 12.33 million metric tons of rice were produced.
The Brazilian version of the farm bill, called locally as Plano Safra (Crop Plan), was announced today (07.06) and the total amount available was R$ 188.3 billion (almost US$ 58 billion). The amount provided is lower than what was available during the 2016/2017 season if inflation is considered. The investment in the previous crop was R$ 185 billion.
By far, the largest percentage of the plan is put on credit subsidy programs. The total amount used in that is R$ 150 billion. Of this total, R$ 116.26 billion will be used on loans with controlled interested rates and R$ 34 billion with regular interest rates.
“We are here to reaffirm our unequivocal support to Brazilian agriculture. The farm business is synonym of efficency,” said Brazilian president Michel Temer at the lauch of the program.
After a recent trip to Asia, Brazil’s Minister of Agriculture, Livestock and Supply, Blairo Maggi, announced that the country will get approximately US$ 2 billion through more trade with these new open markets. “The government stimulates and creates the rules, but the negotiation has to be done by private copanies,” said Maggi.
The goal of Maggi’s mission was to increase the share of Brazil’s participation of agricultural production from seven to 10 percent of the world’s total output. The markets of South Korea and Malaysia had open their doors for Brazil’s swine meat. In the case of Vietnam, the market was reopened for beef, poultry and swine meat, while Indian opened its market for Brazilian leather, wood and fish. In Thailand, negotiations just started for the entrance of Brazilian beef there. In China, the negotiations involved several different products, including grains, coffee and sugar.
INTL FCStone has issued a new report this Friday. The consultancy says that the La Niña phenomena would have a moderate impact over grain crops in Brazil. “For corn and soybeans, the La Ninã would tend to have more intense effects on planting and at the time of crop development with a drier weather,” the study says. But during the first days of 2017, the effects of La Niña would already be soft.
The consultancy’s expectations for the wheat crop are mixed because in the state of Rio Grande do Sul and in the country of Argentina the planting window is different than the state of Paraná.
The government of the new Brazilian president Michel Temer seeks to approve a bill that flexibilizes the rules regarding the purchase of land by foreign citizens. Since 2010, foreign citizens just can purchase law with a limit of 12,300 acres. The new government considers the flexibilization of the law a key change for the country’s economic recovery and development.
Archer Daniels Midland announced on Tuesday it has begun the expansion its bulk grains terminal and silo space at Brazil’s port of Santos, Reuters reported. Greg Morris, ADM’s processing head, affirmed in a statement the work will raise the company’s capacity to transport grains through the terminal to 8 million tons from a current 6 million metric tons per year. Reuters also reported that the expansion and modernization is also expected to help reduce the trader’s emission of particulates of grain dust into the air around its terminal, which had prompted complaints from local businesses and residents. The works should finish by the end of 2017. “We are continuing also with the expansion of our export terminal … in Barcarena (in Para state), which will raise capacity to 6 million tonnes annually,” Morris said.
The Brazilian government announced that it will probably ease the restrictions for foreigners, including U.S. citizens, to purchase land in the South American country. The agricultural sector has lobbied for that flexibilization and the government has admitted to attend the pressure because of need for finacial resources. Big international funds are interested to buy land in Brazil, but currently the law just allows foreigners to buy properties of up to 12,300 acres, which is not much for the country’s Center-West proportions, considering the scale needed for a farm to be profitable with the logistical costs.
Loans for agricultural business in Brazil summed R$ 76.5 billion from July to December of 2015, which is very similar to the amounts of 2014, but the credit operations fell 18 percents because of a riskier economic scenario in the country, according to the country’s Ministry of Agriculture. Analysts say that the state of economy reflects at the farm business with farmers reducing their appetite for investments. The Brazilian economy shrank nearly 3.5 percent in 2015.
The new ports located in Northern Brazil, called locally as North Arc, are expected to ship 25.5 million metric tons of grains in 2016, according to a projection of Brazil’s National Supply Company (Conab). The forecast is based on a possible export of 72 million metric tons of soybeans and 30 million tons of corn. The North Arcs comprises ports recently built in the states of Amazonas, Pará, Maranhão, and Bahia. Those terminals were designed to shrink the distance between Center-western states like Mato Grosso or Goiás and the ports. The most important port of Brazil, Santos, in São Paulo, lies 1,255 miles (2,021 kilometers) away from Sorriso, Mato Grosso, a major soybean producing region, while from Santarém (Pará) is just 850 miles distant.
The market already speculates with a possible lost of the strength of the El Niño phenomenon at the first semester of 2016 and, therefore, the coming of La Niña. The forecast is based on data from the Bureau of Meteorology of Australia and the meteorology services of Japan that puts the peak of El Niño during the first semester of next year. An anticipation of La Niña would result in drier weather in both South America and North America. The market reacted with rallies on the prices of palm oil, sugar and dairy products last week. Some consultancies asked by AgroSouth News have put greater risk in the future for the prices of corn, soybeans, wheat, cotton, and coffee.
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