SB 20/21: The lowest crop in the last 10 years in the region

With a production of 14.5 Million of MT, the oilseed will mark its lowest point in the history of the last decade of the region. Maize reached the highest acreage in this period, but La Niña did not allow it to express itself in record production.

Rains between Monday and Tuesday; later cold

The advance of a cold frontal system will cause rains during Monday and the first part of Tuesday. Then, a sharp drop in temperature.

“The forecasting models indicate that the stability characteristics caused by the change in the air mass will be maintained, at least, until the beginning of next week” comments José Luis Aiello, Dr. in Cs. Atmospheric.

20/21 SB production falls 19% and is the lowest on the last decade in the region.

The 20/21 SB cycle will be marked not only by the smallest area sown in the last 10 years in the region, 4.8 Million ha; but also because of the lower production. With the first SB harvest reaching its end, 90% of the area was threshed, the yield is consolidated at 35 qq / ha. The lowest values ​​are being obtained in the northeast of Buenos Aires province with averages of 32 qq / ha. While the highest average yields occur in the southeast of Córdoba province with 39 qq / ha. Half of the second-class SB harvested in the region marks an average yield of 23 qq / ha. The region averages a yield of 31.1 qq / ha. With these data, the region would contribute 14.5 Million of MT to national production, 19% less than the previous season, and a 25% drop compared to the average production of the last 10 years in the region.

With 14.5 Mt, the production of maize would tie to that of SB

Despite the fact that the area planted with maize is the largest in the last 10 years in the core region, the drought did not lead to record production. Cereal yields were marked by the lack of water characteristic of the 2020/21 campaign. However, this drop was not as abrupt as that of SB. The average total maize yield in the region continues to stand at 93.7 qq / ha, the historical record for the last 10 years being 91 qq / ha. But if we compare it with the average of the last 5 years, it is 4.3 qq lower. Cereal production would be located at 14.5 Million of Mt and would occupy the third position of the highest production in the ranking of the last 10 campaigns. Compared to the most recent season (2019/20), current maize production falls by 720 thousand tons (5%) due to the La Niña effect.

Source: https://bcr.com.ar/

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February turns its back to soy: it rained 23% of the historical rate and the forecast is not good

The regular and bad condition of the SB rose again to 30% and many good frames can collapse. Aiello warns: “a high-pressure center on the south of the continent will have the effect of little or no rain during the next 10 days.”

Stable time for the week

An increase in instability is expected towards the end of the forecasted period, Wednesday, March 3rd. The center of high pressure would began to move to the east.

“The medium-term forecast models indicate that the rains will continue reluctant in the remainder of February and probably during the beginning of the new month,” said Jose Luis Aiello, MD Cs. Atmospheric.

The monthly average of the last 30 years indicates that the region usually receives in February between 100 mm and 120 mm with a clear gradient in favor of the east. But the average of the 36 stations in the region accumulated to date only 25 mm. The highest accumulated monthly were registered in the west of province of Cordoba and NE of the province of Buenos Aires.

What is the status of premium SB in the region today?

The situation of SB is extremely variable, as shown by the reserve of useful water for first-class SB as of February 24^th. The east of Cordoba and the eastern fringe of Santa Fe are exceptionally good. There, despite the tremendous lack of water in February, SB are only needing between 10 mm to 40 mm. The most affected SB are in the extreme south and the western fringe of province of Santa Fe and the north Buenos Aires, especially the west. There, the need for water for the crop rises from 40 to 100 mm. The condition of the crop in the core region shows that 40% of the area is in excellent to very good condition, 30% fair to poor and in the middle, 30% that for now is good but with many doubts. Regarding the good lots (70% of the area) in the city of Pergamino, the technicians say that “they are fine, the condition varies a lot according to the quality of each lot, rotations, handling, and the amount of rainfall they received. They are holding up well, in full fill, but what is the impact going to be? You can’t tell, with 10 days ahead of you without water… Add thrips, spider mites and bolillera. There is great uncertainty”. In the western fringe of Santa Fe, an agronomist who was visiting the area today said: “the SB in good fields have lost 10% of their potential. In intermediate fields 20 to 25%. In regular fields 40 to 50%. This is today (2/25), you have to see how they get to the day of the next rain”. In General Pinto, there are already cases where they estimate losses of 50%. “But everything is very variable according to each batch”, they conclude.

 Aiello: No forecasts in favor for the next 10 days

“The current situation is conditioned by the position of a high-pressure center on the south of the continent, that will have the effect of an episode of little or no rain during the next 10 days. Temperature anomalies will be positive. These two factors will condition a dry pulse”, explains Aiello. “The entry of colder and drier air masses conditioned (during the last seven days) the development of rainfall in much of the country, mainly over the center of the core area and the north of Buenos Aires. Today the highest probability is that the shortage scenario will extend for the next 10 days because although we would have a supply of water, it would be low or moderate amounts. This scenario is for the central region of the country and could be more serious in the south of the province of Buenos Aires. This behavior is more linked to a temporary regional dynamic and is not so dependent on the forcing Niña. The water reserves, even despite the retraction of the rains, are not so unfavorable thanks to the unusual volume of water that closed the month of January. Something that allowed a collection of moisture in the soil that today takes on a more than the significant value”, he concludes.

Countdown to the maize crop in the region

In Pergamino the crop of the first batches of maize began early. Although these are trials, the results are between 80 to 110 ql / ha, 20% below last year. For the rest of the region, the countdown begins: it will start in 10 days. In the city of San Antonio de Areco, they estimate 50 ql / ha. In eastern Cordoba, as in the city of Monte Buey, an average yield of 110 to 120 ql/ ha is expected. The south center of Santa Fe could take the podium of the highest yields. In El Trébol city some lots can exceed 130 ql / ha and the average yield is calculated at 110 ql / ha. An average of 96 ql / ha is estimated for the core region, 10 quintals less than in the last cycle.

Source: https://bcr.com.ar/

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Two months after the end of the campaign, there are almost 10 Mt of maize in stock.

Total purchases of the current 2019/20 harvest are close to 42.4 Mt. This number is below what was acquired on the same date of the previous season. At the same time, the purchase record increased 1.5 Mt during the month of December. With this, 82% of the production of the cycle is sold, subtracting to fix the price of 6% of that tonnage. If the difference between production and purchases (9 Mt) is deducted what is used that does not enter the declaration of industrial purchases, there would be almost 5 Mt of 2019/20 corn available to be marketed. This volume pending commercialization can be valued at the equivalent of US $ 1,035 million, considering the FAS price published by the Rosario Stock Exchange for January 7, 2020.

This volume is not considering the carry-in of the 2019/20 cycle, which amounted to almost 7 Mt, so it would increase the available supply. The volume of maize for this season still available is seen in the official statistics of commercial stocks, which amounted to almost 10 Mt by the end of December.

The Affidavits of Foreign Sales (DJVE) of maize for the 2019/20 season as of January 7 reach 34.2 Mt. Although this record is 4 Mt below the tonnage declared for external sales at the same height the previous year, it remains the second largest in history. Prior to the suspension of the registration of corn exports, shipments abroad were projected at 36 Mt, but with the recent measures taken it is unlikely that 2019/20 exports could exceed the figure of 35 Mt. Up to and including November, according to data from INDEC, Argentina exported 32.5 Mt of maize 2019/20; while shipments in the last month of 2020 are estimated at 983,000 tons. As of December 30, the export sector had already acquired the maize projected to be shipped throughout the 2019/20 season, with 93% already shipped as of December inclusive.

Up to date, industrialists and exporters have acquired 11.3 Mt of the new season to be harvested in 2020/21, representing 23% of the projected production. This is below the purchases on the same date of the previous year (18 Mt) although it far exceeds the average of the last five seasons (7.3 Mt). Regarding the participation of the businesses to be fixed, with 29% of the purchases made under this modality, this ratio is slightly below both the previous season (30%) and the average of the last five years (31%).

Returning to the analysis of the total purchases of maize 2019/20 at the end of last December, these total 42.4 Mt and are equivalent to 72% of the total supply of maize in the commercial year (the production of the current campaign is taken into account and the remaining stocks from previous cycles). The proportion of purchases over the total offer this campaign is then in line with the average of the last 5 campaigns (70%).

On the productive area, the maize in the core zone continue to suffer from the lack of rain. GEA estimates that 65% of the area of ​​this zone presents severe degrees of drought. In the center and south of Santa Fe, west of Cordoba and north of Buenos Aires there are about 400,000 ha of maize in fair to poor conditions, which represent 30% of the early maize in the region. In the first days of the year, only the south of Córdoba managed to accumulate about 30 mm of rainfall. Currently, 75% of the crops in the core area are in the first stages of grain filling for which a water replacement is imperatively necessary. The water was enough to sustain a good flowering but now the soils no longer have enough reserves to achieve a successful filling, so the rains in the coming weeks will be crucial for these crops.

Chicago: contracts bought and prices on the rise

In the international context, an interest rate scheme close to zero is presented in the world, with the expectation of being maintained in the coming months. This situation has led the funds to invest more capital in commodities, including agricultural commodities. Thus, international conditions encouraged a net buyer positioning of the funds in Chicago that exceeded 40 Mt on 29/12/2020.

In the same sense, by modifying the net position from 30 Mt sold on 27/10 to the current status of the funds, it has contributed to a sustained rise in the prices of yellow beans over the last few months, reaching maximums of US $ 183.46 / t on 12/29.

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2020: The evolution of agricultural commodities, oil, gold, dollar and, stock indices

In less than two days, the year 2020 will be ending and, it will be possible to say that it was a year that developed in a completely unexpected way, where the general trend was wide volatility and uncertainty.

In 2020 there was enormous volatility in the agricultural commodity markets. The prices of these products were already very weakened by the intense trade war between the US and China and when, at the beginning of the year agricultural prices began to improve reflecting the positive commercial advances between the two powers, the COVID-19 pandemic was present and erased the improvements achieved, plunging wheat, maize, and SB to levels similar to those of 2019. Even in the case of corn, the highest volume contract operated in Chicago fell in April to its lowest value since 2009 However, after reaching these minimum values, the trend in prices was reversed as a result of the production falls in large suppliers and mainly the strong climatic uncertainty in Brazil and Argentina, the peak of demand for food that motivated the quarantines in different countries, along with vigorous Chinese demand aimed at accumulating stocks of agricultural commodities. This has led to Chicago farm contracts not only exceeding the prices recorded at the beginning of the year but reaching multi-year highs. Currently, all-grain prices (both locally and in Chicago) are less than 10% below their 2020 highs and 25% above their annual lows. Furthermore, locally, values ​​have risen more than their peers in the United States.

Part of these gains was also the consequence of the weakening of the dollar against other currencies. The Dollar Index, which measures the value of the US currency in relation to a basket of foreign currencies, reached its maximum for the year in March (relative strengthening of the dollar) while to date it is at an annual minimum (relative weakening). This in part increased the value of commodities since it is relatively cheaper to import in dollars.

Of the selected variables, only the dollar and oil are below their initial value of 2020. In the case of oil, it suffered a sharp drop in its international demand as a result of the spread of COVID-19 that brought coupled with generalized restrictions on transit and trade globally. This event, added to the implications of the futures called “with delivery” when they are close to expiring, caused the price of West Texas Intermediate (WTI) to fall until trading in negative territory for the first time in history.

For its part, gold exhibited a bullish rally in the first months of the year due to international political tensions and, as in the case of agricultural goods futures, the relative weakness of the dollar also pushed the metal up beautifully. In the year, gold reached its all-time high on August 6, largely due to its quality of store of value. Currently, the value of gold is US $ 179 below this maximum, assuming a value of US $ 1,890 per ounce.

In less than two weeks, the year 2020 will be ending and, it will be possible to say that it was a year that developed in a completely unexpected way where the general trend was wide volatility and uncertainty. The following table shows the behaviour of a series of variables selected from January 1 to the first half of December.

In 2020 there was enormous volatility in the agricultural commodity markets. The prices of these products were already very weakened by the intense trade war between the US and China and when at the beginning of the year agricultural prices began to improve reflecting the positive commercial advances between the two powers, the COVID-19 pandemic was present and erased the improvements achieved, plunging wheat, maize, and sb to levels similar to those of 2019. Even in the case of corn, the highest volume contract operated in Chicago fell in April to its lowest value since 2009 However, after reaching these minimum values, the trend in prices was reversed as a result of the production falls in large suppliers and mainly the strong climatic uncertainty in Brazil and Argentina, the peak of demand for food that motivated the quarantines in different countries, along with vigorous Chinese demand aimed at accumulating stocks of agricultural commodities. This has led to Chicago farm contracts not only exceeding the prices recorded at the beginning of the year but reaching multi-year highs. Currently, all-grain prices (both locally and in Chicago) are less than 10% below their 2020 highs and 25% above their annual lows. Furthermore, locally, values ​​have risen more than their peers in the United States.

Part of these gains was also the consequence of the weakening of the dollar against other currencies. The Dollar Index, which measures the value of the US currency in relation to a basket of foreign currencies, reached its maximum for the year in March (relative strengthening of the dollar) while to date it is at an annual minimum (relative weakening). This in part increased the value of commodities since it is relatively cheaper to import in dollars.

Of the selected variables, only the dollar and oil are below their initial value of 2020. In the case of oil, it suffered a sharp drop in its international demand as a result of the spread of COVID-19 that brought coupled with generalized restrictions on transit and trade globally. This event, added to the implications of the futures called “with delivery” when they are close to expiring, caused the price of West Texas Intermediate (WTI) to fall until trading in negative territory for the first time in history.

For its part, gold exhibited a bullish rally in the first months of the year due to international political tensions and, as in the case of agricultural goods futures, the relative weakness of the dollar also pushed the metal up beautifully. In the year, gold reached its all-time high on August 6, largely due to its quality of store of value. Currently, the value of gold is US $ 179 below this maximum, assuming a value of US $ 1,890 per ounce.

As for the US stock indices, the S&P and the Dow Jones, both fell due to the impact on economic activity of the coronavirus and their respective annual lows coincide on the date 03/23/2020. From there, the path was one of ascent and, after the presidential elections in the main world power, both indices strengthened until reaching all-time highs at present.

Among the selected local indicators are the dollar (Banco Nación Buyer y Contado Con Liquidación) and the stock indices MERVAL and ROFEX20.

The first group presents different performances, on the one hand, the Buyer Nation Bank Dollar is currently at its maximum, as a result of the “crawling peg” or gradual depreciation scheme applied by the national government to control currency movements. For its part, the Cash Dollar With Settlement (CCL) also showed an increase since the beginning of the year. To graph the above, it is enough to point out that the minimum value was registered on January 3, 2020 and that so far it has increased by 95.66%. However, the maximum of this indicator occurred on October 22 when each CCL dollar reached $ 180.14, to approximate $ 142.54 in mid-December.

Finally, the local stock indices, MERVAL and ROFEX20, coincide on dates of minimums and maximums with their US pairs. The lows were on March 18, while the highs were found on November 27. In addition, they are similar to gold, S&P and Dow Jones since this year’s highs are in turn the historical highs. It should be clarified that the maximums of the local indices correspond to their denomination in Argentine pesos, the situation being different if they were valued in dollars. Currently the MERVAL and the ROFEX20 are between 4% and 5% below the highest historical values ​​in pesos, and between 140% and 150% above the minimum values ​​of this year, which accounts for the great recovery perceived (although the caveat must be made again that nominal variations are measured, and that part of these increases are a consequence of the positive evolution of the exchange rate).

Climatic uncertainty and delayed shipments condition the soy and corn market

In the Up River Influence Zone, that is, the regions from where the grain that will be exported by the ports of Gran Rosario originates, early corn plantings were seriously affected by the lack of moisture in the edaphic profile caused by the drought that hit the area in September and October.

This situation will have a marked impact on the cereal arrivals at the Up River terminals in the first months of the harvest, March, and April. Taking as the cut-off date for early corn on October 31, according to the Ministry of Agriculture, 2.49 million hectares had been planted until that moment, 134,000 ha (-5%) below what was achieved in the previous season, and thus registering the lowest mark in four years. The situation in the rest of the country’s surface is different, concentrated in the south-central province of Buenos Aires, where the 882,000 ha. planted before 10/31 represent an advance of 69% compared to the campaign mark. previous.

Meanwhile, considering the entire national territory, the area planted with early maize rose 7% compared to last year, but this notorious disparity between regions may impact the share of shipments from the Greater Rosario area in the total. of dispatches.

Late maize presents a diametrically opposite picture. As of December 17, the planted hectares of this segment in the Up River Influence Zone totaled 2 million hectares, 4.3% ahead of last year’s mark for this height of the previous year, thus setting a historical record. Meanwhile, in the rest of the country, the introduction of late maize is 13% behind what happened last season, which is explained by the strong increase registered in early corn for that region.

Summer crops. Logistics patterns in the Gran Rosario.

The extensive summer crops are planted every year in Argentina between the months of September and December, being harvested in a wide period that goes from February to July. In the core area of the country, which includes north of Buenos Aires, south of Santa Fe and southeast of Córdoba, the most important summer crops in productive terms are SB, maize, and sorghum. During the last 5 completed campaigns to date, in the 10.3 M ha that make up the core zone, an average of 37% of the national SB crop, 26% of maize and 13% of the sorghum.