Maize harvest and wheat planting progress each at their own pace

While the maize harvest is delayed due to high moisture, wheat planting scales up to 31% of the target area. In the United States, wheat ends its 2021/22 campaign with the worst volume of exports on record.

Below its historical average, the maize harvest continues

With the arrival of June, the maize harvest was completed in half of the sown area, exceeding 56% of the lots as of June 9^th. With a sustained growth of the area planted with corn, 4.55 million hectares of maize are still pending to be harvested, an amount only surpassed by last season. It should be noted that the current campaign is characterized by breaking the 10.3 Mil Ha barrier, above the 9.7 Mil Ha of the previous year and comfortably above historical averages.

However, the late maize harvests in the provinces of Buenos Aires, Cordoba, and Santa Fe are advancing slowly, waiting for the corn to reach proper moisture levels. Considering this, the impact of the shortage of diesel is limited by this harvest delay. Once the adequate moisture levels have been reached, if the diesel shortage scenario persists, maize could continue harvest below its historical average.

Meanwhile, Corrientes, Misiones and Entre Ríos provinces have practically finished their maize harvests. The provinces of Santa Fe, Buenos Aires, and Formosa follow with high levels, with 71%, 54%, and 44%, respectively. Córdoba reflects 41% of maize harvested, while La Pampa, San Luis, and Santiago del Estero provinces complete the list with 38%, 43%, and 31% of the area.

Within this context, the WASDE report presented by the USDA last week is also relevant. Referring to the world corn scenario, it shows an increase in harvest estimates, jumping 5.1 Mil MT compared to the previous report, reaching almost 1,186 Mil MT. However, this figure is still 2.5% lower than that of 2021, when it reached 1,216 Mil MT.

One of the most important factors for the rise in maize prices is related to the drop in the area planted worldwide, of almost 1.6%. Along with this, the global yield is estimated to be 1% lower for the 2022/23 campaign, which results in a consolidated production drop of almost 2.49% for the coming business year.

The rapid escalation of wheat 2022/23

Contrary to the slow harvest of maize, sowing of wheat has been gaining pace and has already covered almost 31% of the target area. It should be noted that for the coming campaign 2022/23 the wheat area is expected to exceed 6.7 Mil Ha, slightly below the current commercial year.

The first week of June saw strong increases in international wheat prices in the Chicago market, reaching 450 USD/MT. Operators closely follow the weather situation in the United States, which has been impacting prices. There was also a rally in maize, where the contract due next month increased by 2.13% or USD 6.10 and registered a price of 292.81 USD/MT.

At the local level, the price of wheat on the Matba-Rofex rose USD 40 in the previous weeks, establishing a great milestone in prices, with each ton trading at USD 367. As for maize, the increases were slight and reached 310 USD/MT in June; given that, in May they registered values ​​of USD 320 per ton, and in March they touched 350 USD/MT.

In the United States, wheat wraps up the commercial year with the worst volume of exports on record

The US 2022/23 wheat campaign began with the commencement of June. The end of 2021/22 found the United States with its worst export volume on record, with 18.6 Mil MT. This volume of exports represented a drop of almost 25% compared to last business year.

The complex productive dynamics of US wheat were decisive for such a pronounced decline. In addition to successive deteriorations in winter wheat, spring wheat in the United States showed its worst crop condition in history last year, which necessarily impacted production and export volumes. The US outlook for 2022/23 finds winter wheat, which accounts for about three-quarters of the wheat crop, in one of the worst growing conditions on record, also complicating the production’s current outlook.

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After the crisis, Chinese pork stock recovers

China recovered its pork stocks and, last year, reached a record of meat production. In the global market, fewer pork imports are expected from China, and in the beef and poultry sector, the Asian giant remains firm.

In 2019, China suffered a major outbreak of African Swine Fever (ASF), which is a highly contagious and deadly viral disease that affects both domestic and wild pigs of all ages. While the condition is primarily found in sub-Saharan Africa, in recent years it has spread throughout China, Mongolia, and Vietnam, as well as within parts of the European Union. It’s worth mentioning that this disease is not a threat to human health and cannot be transmitted from pigs to humans.

The main consequence of the outbreak of this disease in China, was a significant decrease in the pork stock, from 428 million heads at the end of 2018 to 310.4 million at the end of 2019. In other words, China suffered a loss of 117.5 million animals (↓ 27%), strongly affecting local production and, consequently, the possibility of internal supply to meet the demand for the main meat consumed by the Chinese population.

In accordance with the high demand for this product, in the 2020/21 period, rapid and efficient recovery of pork stock levels was observed; that jump from 406.5 million heads in 2020, to 449.2 million heads at the end of 2021, a number that exceeds that of 2017 although it is below the maximum of 480.3 million in 2012. According to USDA estimates, by 2022 stocks are expected to continue to increase, reaching 460 million heads; 2.4% higher than the previous year. These high levels of recovery are due not only to Chinese efficiency in handling the problem but also to the increase in the number of breeders.

Regarding the country’s meat production data, the disruption in the pork market affected the availability of animal protein in a population that has been steadily increasing domestic consumption of meat in general terms. In 2019, pork production fell to 42.5 Mil MT, meaning a decrease of almost 12 Mil MT in production, according to data from the official Chinese statistical agency. Likewise, in 2020, production volumes continued to fall, reaching a floor of 41.13 Mil MT.

If we analyze the evolution of beef and poultry meat production in the Chinese market, we can see that they managed to compensate only partially the lower production volumes of pork between 2019 and 2020. In the case of beef, in 2020 there was a slight bounce-back compared to 2019 but without exceeding volumes from previous years; while in the case of poultry meat, a relatively rapid reaction stands out with an increase of 2.4 Mil MT in production, reaching 22.3 Mil MT in that year.

This production trend of China’s main meats held for the year 2021, at the same time that the recovery of pork stocks already had a significant impact on the generation of animal proteins. In the last year, the production of pork increased more than 10 Mil MT to 52.96 Mil MT and with expectations of increasing it by 5% in the current year. This way, due to the increased production of pork substitutes and the current recovery in said market, in 2021 a record was reached in the production of the main types of meat.

These higher production volumes and the prospects that they continue to rise are expected to cause a further decrease in imports from this country, recalibrating the volatile international market among the main importers and limiting increases in cattle prices.

The increase in production and the consequent decrease in imports is further reinforced by conflicts in the country’s supply chains due to its COVID-0 policy, which drives shortages of refrigerated containers and delays scheduled shipments, increasing costs and challenging product delivery dates.

Interestingly, according to a FAS/USDA report, the top 20 publicly traded hog producers would have reported losses totaling nearly USD 80 billion in 2021, and due to this financial retrenchment and excess supply of sows, significant quantities of sows were sent to slaughter to increase cash flow.

This is in line with the regulation imposed by the Asian country that requires producers and provinces to maintain the national inventory at approximately 41 million sows. These measures could further accelerate concentration in the pig sector. This year, inventories, along with more efficient breeding sows, are expected to improve production rates.

Globally, imports of beef and poultry in 2022 will continue to rise, driven by higher consumption and firm demand from China and the main importing countries. Meanwhile, in the case of pork, global imports are set to fall by 3.3 Mil MT in 2022 due to lower demand from China. In this case, given the recomposition of pig stocks and the increase in production mentioned above, in the first 6 months of the year, Chinese imports have been limited while competing with low domestic prices for pork, added to a return of the MFN tariff applied to imports of frozen pork, going from a provisional 8% to 12%. In this regard, live pig imports in 2022 are expected to decline further as the sow herd stabilizes.

Finally, COVID-19 restrictions are expected to reduce pork consumption in the HRI (Hotel, Restaurant, and Institutional) sector where chilled and frozen pork is consumed. The report released by the USDA in March 2022, shows that consumers diversified their consumption of meat during the period of “high” pork prices after the African swine fever outbreaks and that these changes in preferences appear to have persisted even as pork prices declined in 2021.

While if a perspective is contemplated towards the year 2031 compared to the year 2018 – before the event that seriously affected the stocks of pigs in China – in general terms, a sustained increase in the per capita consumption of meat by the more populous country in the world is expected. Recovery and a slight increase of 2% in pork meat and a strong increase in the consumption of beef (↑ 41%) and poultry (48%) are projected.

Regarding the impact of this situation on the global market, the USDA projects that between 2018 and 2031 imports will increase by 278% in pork, 179% in beef, and 291% in poultry.

In 2021, China committed to a free trade agreement with Uruguay; and on February 23, 2022, the Asian giant updated the list of beef products available to import from Chile, including certain bovine by-products. More than 80% of Chile’s beef exports go to China.

Therefore, there are great opportunities for meat exporting countries, where Argentina is a central player in the case of beef and is developing significant potential in the pig market. Public policies and institutional incentives to increase production will be key, to ensure an adequate supply of the domestic market and take advantage of our competitive advantages to monopolize a growing market share in these three meat sectors.

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

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Record of wheat exports in first half of 2021/22, with Africa as main destination

Wheat exports in the first half of the 2021/22 campaign reach a historical record in tonnage. Meanwhile, the relative importance of Africa grew strongly within the destinations of Argentine cereal.

With 6 months having already passed since the start of the 2021/22 wheat campaign, cereal consumption presents a mixed scenario between the export sector and the local milling area. On the export side, the tons exported in this first semester exceed 12.7 Mil MT, a historical maximum for the same period of previous years.

In fact, except for the 2016/17 campaign when 12.8 Mil MT of grain were exported, the volume exported between December and May of the current commercial cycle (shipments for May are taken as an estimate since the official numbers from INDEC will only be announced in the second half of June) is higher than what was exported in the entire campaign considering previous years.

Furthermore, attractive international prices have generated a total value of grain wheat exported in the first half of the year exceeding USD 3.74 billion, also a record for the same period in previous cycles. Additionally, the difference with the previous record of 2007/08 is almost double: at that time, in the first half of the campaign, exports achieved were for USD 2,080 million.

It is interesting to note that, although Brazil remains the main destination for shipments of Argentine wheat (with 2.6 Mil MT of imports, somewhat below the 2.7 Mil MT shipped in the first half of the previous year), a marked growth of Africa in the participation of cereal shipments can be clearly seen. According to one shipping agency, in the first six months of the 2021/22 business cycle, about 5.9 Mil MT were shipped to African coasts, almost triple what was shipped in the first half of the previous year.

Usually, due to geographical proximity, African countries tend to receive wheat from Russia or Ukraine, particularly those countries of northern sub-Saharan Africa. However, it is clear that the war that is taking place between the two countries, added to the greater Argentine production in the current campaign, has led several of these countries to opt for Argentine origin.

Finally, the increase in shipments to Asia also stands out. Between December and May, more than 2.3 Mil MT were exported to that continent, more than double the amount exported in the first six months of 2021/22. However, in percentage terms, there is no increase in Asia’s share of total exports, which is explained by the aforementioned greater total tonnage exported. Among the main Asian recipient countries of Argentine wheat, Indonesia stands out, with more than 1.5 Mil MT received, while in the same period of the previous cycle 360,000 MT had been shipped to this country.

As for domestic consumption of wheat, milling accumulated between December and April reaches 2.39 Mil MT, barely 3.6% more than in the first four months of the previous campaign. After having started the campaign with a considerably higher industrialized volume than 2020/21, milling began slowing down and the difference from the previous cycle was reduced.

Wheat milling in April totaled 500,000 MT and, along with the processed volume last year’s April, is the lowest for an April since the 2016/17 campaign.

This difference in the tonnage used by the export sector and the milling sector is consistent with the levels of grain marketing in each sector. The export sector has acquired more than 17 Mil MT, an absolute record for the time of year and exceeding the mark of the previous campaign by more than 7 Mil MT. At the same time, the milling sector has only made purchases for 2.68 Mil MT, the second-lowest volume in the last seven cycles and only surpassing what happened a year ago when the sector’s purchases totaled 2.51 Mil MT.

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Foreign sales of new wheat begin to stabilize

The 2022/23 wheat export record finds its limit in the balance volume set by the National Government. The input-output ratio for wheat improves, although it is higher than last year.

The marketing of wheat 2022/23 continues to add tons. With more than 0.5 Mil MT recorded in the month, the total foreign sales of wheat for the coming campaign already exceed 8.5 Mil MT, with less than half a million tons remaining to be declared in the short term, given the volume of balance established by the MAGyP.

Although the balance volume is set by the Government at 10 Mil MT, once 90% of this tonnage has been reached, the rest is sold under the DJVE-30 regime, an impossible situation in the short term given that this wheat is just beginning its production sowing. Such a situation shows several facets of analysis. On the one hand, the great stress generated by the establishment of quotas in the market by affecting marketing decision-making with a recorded volume that today is well above previous years. On the other hand, when reaching a ceiling in the possibility of foreign sales, exporters are unable to react quickly to take advantage of profitable situations in terms of international prices, which can affect the performance of the export complex.

For its part, the low soil moisture in Córdoba slows down the start of the 2022/23 wheat planting, according to MAGyP. However, in the province of Buenos Aires, work before planting has already begun, with some progress in planting in a context of a strong need for water, especially in the south of Buenos Aires. Likewise, in Santa Fe province the first batches have already been planted, although fertilizer dosing was recorded with humidity levels that are not optimal for planting either. Meanwhile, the planting of wheat in Salta and Jujuy, provinces with a smaller relative share of the national fine harvest, is speeding up and advancing rapidly.

The international prices of fertilizers continue to fall week after week as the supply of these key inputs in the world normalizes. Although the Russian-Ukrainian conflict persists, fertilizer exports from Russia, the world’s leading exporter, continue at a good pace, to the extent that important buyers such as India have not been validating the high prices in their international tenders.

In this way, the prices of urea and MAP, key for wheat, have been falling month by month. Consequently, the input-output relationship of wheat with its main fertilizers improves as planting begins. In any case, fertilizers continue to grow above the evolution of wheat prices, which shows us Urea/Wheat and MAP/Wheat ratios that are 26% and 13% above last year, deteriorating the margins of the fine harvest, according to information from Fertilizer Engineering (IF). However, with the Russian-Ukrainian crisis at the end of February, these ratios reached 62% and 26% respectively.

Russian wheat shipments grow, while the biggest doubts are what will happen to Ukrainian ports in the short term

Unexpectedly, the Russian export panorama has been above the volumes exported last year with 9.7 Mil MT in the first five months of the year and is close to the start of the new commercial campaign. In this sense, the sanctions of a wide spectrum of countries towards Russia do not reach its wheat shipments, which have Turkey and Egypt as its main destinations.

Meanwhile, the bulk of Russian exports is concentrated in the Black Sea ports. Terminals in Azov, Kavkaz, and Novorossiysk account for about 80% of Russian wheat shipments abroad.

At the same time, shipments of wheat from Ukrainian ports have accumulated 2.82 Mil MT so far this year, with an almost total stagnation of grain shipments since the start of the war with 0.33 Mil Mt respectively.

The biggest current concern in the global market is what will happen to wheat exports from Ukraine starting in July. The USDA already discounts lower exports from that country with 10 Mil MT in the 2022/23 campaign compared to 19 Mil MT in the previous campaign, but it is key that port activity is renewed in the short term to be able to export these grains.

For the 2022/23 campaign that is about to start, according to the USDA, the total supply of wheat in Ukraine would be 27.2 Mil MT, a very significant drop compared to the 34 Mil MT reached in the 2021/22 cycle. In this sense, a significant decrease in the planted area is estimated that will affect production, which would be partially moderated by the strong increase in initial stocks that are estimated at 5.85 Mil MT due to the impossibility of exporting due to the war.

However, it must be taken into account that a considerable strip of the Ukrainian coast is under Russian control. Consequently, the possibility of exporting Ukrainian wheat and other crops is subject to the Russian will. This week the president of Russia, Vladimir Putin, stated that he will facilitate exports to the extent that the sanctions against his country are withdrawn. Consequently, the volume of shipments from Ukraine depends fundamentally on factors that are not related to the productive activity itself.

In terms of prices, the week was marked by declines in Chicago wheat futures. Compared to last week’s close, wheat showed falls of USD 10/t, to settle at close to USD 420/t on Thursday. In the local market, available prices also showed declines, with buyers picking up in the middle of the week. Open offers for both available and contractual delivery stood at USD 360/t, also USD 10/t lower than last week.

On the contrary, 2022/23 wheat positions climbed USD 10/t in the week in the local market and closed at around USD 340/t. The gains were also reflected in MatbaRofex, where the December position rose more than USD 8/t to return to above USD 350/t.

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New to-be-fixed wheat breaks volume records

Domestic purchases of wheat are at record levels in both absolute and relative value. Exports of US wheat, at historical lows.

Future purchases of wheat at this time of year are becoming the rule rather than the exception. Hand in hand with the growth of production in Argentina, 2022 is consolidated as the 5th consecutive year with internal purchases of wheat for the next campaign in May, new normality that before now, had only been observed in 2011 and 2001.

Of the total purchases for the 2022/23 wheat campaign to date, more than 44% are under a price-to-be-fixed condition, a record for this time of year. In other words, of the 3.6 Mil MT already purchased between export and domestic, more than 1.3 Mil MT still do not have a firm price, consolidating a milestone both in tonnage and in relative terms.

The growing commercialization for wheat is also seen in exports, which totaled half a million tons so far in May and are close to 8.5 Mil MT for 2022/23 wheat. However, caution persists concerning production volumes. As highlighted in a recent report of the Strategic Guide for Agriculture (GEA-BCR), the commercial campaign which starts in December of this year comes with a lower planting-intention, which, in turn, could be accompanied by fewer technological applications in the face of turbulence in the input market.

As far as the current campaign is concerned, Upriver continues to recover its prominent role in the export of the final campaign. Consolidating shipment data up to April, the tonnage shipped from the ports of the greater metropolitan area of Rosario city grew by more than 12.5% ​​so far in 2021/22.

US wheat exports are at historical lows

Caution reigns in US wheat. Ten days before the start of the 2022/23 business year, wheat exports do not exceed 20 Mil MT, this being the lowest value in at least 32 years, according to USDA data.

The cause of this must be sought in the meager conditions for the development of crops in North America. Indeed, we must go back just as far to find such poor crop conditions for US winter wheat. With only 27% of the plots in Good+Excellent condition, a wheat harvest in this condition has not been seen since 1996, discounting falls in production yields, reinforcing commercial caution.

To make matters worse, this week began with a Monday where wheat topped its maximum daily allowable rise in Chicago. Surprisingly, India announced that it was suspending cereal exports, leaving more than 1.8 Mil MT of wheat in limbo in ports, exports that were finally exceptionally authorized. In the context of the conflict in the Black Sea region, India’s wheat came to alleviate the strong grain needs of Egypt and Turkey, among other countries. The unexpectedness of this closing was what strongly underpinned prices since close to 10 Mil MT were expected from the Asian giant.

According to the SovEcon consultancy, there are no signs for now of a de-escalation of the Russian-Ukrainian crisis, although this week the first official communications between the defense ministries of both countries were seen. In this complex global supply framework, the week showed increases of 3% in Chicago and on Thursday the ton of wheat closed close to 442 USD/MT. For its part, the local market was not immune to the volatility of international markets. In Rosario city, the cereal showed increases in line with the US market, and offers of 375 USD/MT were seen to unload in June, 3% above last week. At the same time, offers for the 2022/23 business year showed increases of 5 USD/MT for the December position and 15 USD/MT for the following months, closing at 355 USD/MT and USD 370 respectively. Contrary to the rises, in Matba-Rofex wheat futures showed a slight drop of 0.7% in the week, settling on Thursday around 354 USD/MT.

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Harvest of coarse grains advances firmly in Argentina

With the absence of rains, the SB harvest reached 76% of the total area, above the 2020/21 cycle. In the same manner, maize harvest maintains a slightly lower rate than in recent campaigns, although in absolute terms, the planted area is a historical maximum.

The threshing of the main oilseed produced in Argentina has been intense in the last 6 weeks. The lack of generalized relevant rains in recent weeks has facilitated the rapid progress of work, although it is beginning to cause concern in the face of winter planting. In this sense, according to the data collected by the Ministry of Agriculture, Livestock, and Fisheries (MAGyP), as of May 12^th, 76% of the area destined for sowing in the 2021/22 campaign has been harvested, when at the beginning of April, we saw progress of 9%, which also exceeded the last 5-campaign average, of 72.2%. However, it should be noted that in absolute terms the progress of the current harvest is below past cycles, compared to the fall in the area dedicated to SB.

For its part, maize harvest has also been registering a good pace in relation to recent campaigns, although it remains below maximum levels. In this sense, up to May 5^th there was a 41% progress, while in the 2020/21 cycle the figures showed 36% of the surveyed surface. However, as the average harvest of the last 5 campaigns was 43.4%, this is why it translates to just a slight delay of 1.4 percent.

Despite not being the highest percentage harvest progress, it should be noted that due to the increase that has occurred in recent years in the area destined for corn, this rate results in the largest area raised to date. Indeed, the 4.22 Mil Ha that have been harvested up to May 13^th is 25.3% higher than last year’s records, while the increase compared to the average of the last 5 years is 19.6 %. At the same time, this figure reflects the importance that maize has acquired in recent years if the area harvested to date in this campaign is compared with the first cycles of the 2010 decade.

While the 2021/22 coarse grain harvest is underway in Argentina, the 2022/23 maize has already begun to be sown, showing slow work progress. In fact, in the monthly report of estimates that the United States Department of Agriculture (USDA) presented this Thursday, the projection of US production for the new campaign was 367.3 Mil MT, which is 16.6 Mil MT below the previous campaign. However, it must be taken into account that this figure still represents a production level in accordance with the performance of the last campaigns, since the average of the previous 5 years is 364.7 Mil MT. In other words, the maize campaign that today is currently being planted in the US, if the estimate materializes, it would be 0.7% above the average of recent years.

Meanwhile, SB production is expected to make a strong recovery after the production loss that occurred around the globe during the 2021/22 cycle. Although the production decrease estimated by the USDA is 5% between the 2020/21 and 2021/22 campaigns (368.1 Mil MT vs. 349.4 Mil MT), for the 2022/23 period it is expected that the increase in the production of the oilseed would be around 394.7 Mil MT if the US estimates come through, suggesting a rise of 13%, mainly thanks to the greater production in South America.

To account for this, it should be noted that the trident made up of Argentina, Brazil and Paraguay would increase the productive result of the group by 22.6%, highlighting an interannual increase of 138% for Paraguay, followed by Argentina and Brazil with increases of 21, 4 and 19.2% respectively. Finally, as a consequence of these production variations, the participation of the largest SB generators in South America would represent a larger portion of the world supply, going from 49% to 53% in the 2022/23 cycle.

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Domestic soybean trades (in MT) hits lowest point in last 19 years

Domestic SB sales total 14.1 Mil MT, the lowest volume in 19 years. The lower production of the campaign is the main reason, to which we have to add the slow commercial dynamics abroad: export business is the lowest in the last decade.

With more than a month having passed since the start of the 2021/22 SB campaign, grain trades show a clear impact due to the lower production of the campaign and the delayed external demand. According to MAGyP data, the SB volume sold reached 14.1 Mil MT on April 27, the lowest in absolute terms in almost two decades.

However, if we consider sales as a proportion of the production obtained in each campaign, the record for the current cycle is more in line with historical figures. The 14.1 Mil MT marketed represents 34% of the 41.2 Mil MT that are estimated to be produced for the current cycle, similar to the 36% of the previous year and the 37% of the average of the last five years. Moreover, it is higher than the 31% it represented in 2018/19.

Needless to say, the slower pace in the internal grain trade has its correlation with external sales of beans. According to export permit (DJVE) data, foreign sales of SB amount to just 347,000 tons, falling below the 663,000 tons of 2017/18, which until now was the lowest record previously held for this time of year. This way, bean exports are at an all-time low for this time of year since at least 2011/12.

If we consider the entire SB complex, the situation becomes uneven among the different products. Looking at export permits (DJVE) for oil and meal/pellets combined, foreign sales have been declared for 7.8 Mil MT, 25% less than what had been sold at this point in 2021. Furthermore, when we look at the volumes declared in the last decade, this is the second-lowest tonnage, only surpassing what happened in 2017/18 when 5.6 Mil MT of all the complex’s products was sold abroad.

This lower-declared tonnage compared to previous years is fully explained by lower exports of soybean meal/pellets. These add up to a total of 5.7 Mil MT, while last year 7.5 Mil MT had been declared. In contrast, SB oil DJVEs total 1.7 Mil MT to date, a record since at least the 2011/12 campaign.

It becomes evident that the persistence of the Russian-Ukrainian conflict (which has reduced the world supply of sunflower oil) combined with the limitations on the export of palm oil imposed by Indonesia has led to a lower global supply of vegetable oils, boosting foreign sales of Argentine SB oil.

As for maize, the volume sold does not present too much of a difference from what was observed in previous years. Currently, 23.7 Mil MT of grain have already been sold, somewhat below the volume that had been marketed at this point in the previous year (24.9 Mil MT) but exceeding the average of the last five campaigns (18.5 Mil MT). Additionally, when we consider sales as a proportion of production, we find that these represent 48%, identical to the sales proportion represented over the production of the previous year.

Lastly, a comment on foreign sales of maize. Today, the Undersecretary of Agricultural Markets (SSMA) through Circular No. 3/2022 established a new Export Equilibrium Volume of 30 Mil MT, increasing by 5 Mil MT from the 25 Mil MT initially set last December.

Currently, the accumulated DJVE of corn totals 23 Mil MT. After having started the campaign as a record for the time of year, the existence of the Balance Volume prevented the registration of new export permits, meaning that the current campaign was surpassed by what happened in last year, which at this point had already registered permits for 26.3 Mil MT.

Therefore, the increase in the quota will allow a greater dynamic to the export market of maize. Meanwhile, it should also be noted that the SSMA also established a Balance Volume of cereal for the next campaign 2022/23 of 10 Mil MT.

What happened in terms of prices?

In the past 2 weeks we have had a mainly bearish trend in the local SB market. The Arbitration Chamber of Cereals of the Rosario Stock Exchange revealed SB board prices that ranged from 449.1 USD/MT (on March 4^th) to 425.1 USD/MT on May 5^th. This decline suggests a fall of 5.3% in a matter of 14 days. However, we should note that local prices are well above the records of past campaigns for this same time of year. This way, the increase compared to the 2020/21 is 25.4%, highlighting that this campaign occupies the second-highest value for this time of year. Likewise, the average of the last 5 campaigns for this same date, which was 263.2 USD/MT, so the latest value of SB represents a jump of 61.5% compared to said average.

For its part, maize progressed without no marked trend. Greater volatility was seen between corn prices in the last 2 weeks. Board values on April 21^st were at 270 USD/MT, while prices were set at 264.7 USD/MT on May 5^th, showing a decrease of 2.1 %. As is the case for SB, local prices measured in dollars also set records for this time of year, with little more than 2 months having elapsed since the formal start of the harvest. Comparing prices with last season (238.1 USD/MT), as well as with the average of the last 5 cycles (167.1 USD/MT), we have increases of 11.2% and 58, 5% respectively.

Lastly, regarding the foreign market during the week, the impact of the war between Russia and Ukraine once again generated pressure on oils, underpinning the prices of futures traded in the Chicago market. The contract with the largest volume of SB oil reached a historical nominal record, closing on April 28^th at 1,909.2 USD/MT. However, this value didn’t stand the test of time, since by May 2^nd a settlement of USD 1,765.7 (-143.5 USD/MT in only 2 rounds) was already seen. Finally, the values ​​of the oilseed by-product closed the session on Thursday at 1,804 USD/MT.

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Agribusiness responsible for 3 out of every 10 AR$ of Added Value in Santa Fe province

Agribusiness also accounts for 70% of Santa Fe’s general products. The activities that make this economic area have strategic importance, equivalent to that of mining, oil, or tourism for other jurisdictions.

Valued at constant prices, the share of the Gross Geographical Product (GGP) of the Province of Santa Fe, proved to be in 2020, 10.7% of the National Gross Added Value (GVA). The weight of Santa Fe’s participation in the national economy increased almost one percent in the last 10 years, when in 2010 it was registered at 9.2%. The involvement Santa Fe’s economy in the national total coincides with the growth of the agro-industrial sector within the productive matrix. The increase in the participation of Santa Fe in 2020 continued to occur because the activity of the province of Santa Fe, predominantly agribusiness, fell less during the pandemic.

The Agroindustrial Sector, which includes both those that produce primary agricultural goods as well as companies that industrialize these raw materials, has a preponderant weight in the province’s economy. In fact, it is the provincial economic sector that has the greatest participation in the national economy is that of Agriculture and Livestock, whose GNP reaches 16.9% of the country’s total production.

In total, during 2020 the Agroindustrial Sector concentrated in 32% of the Gross Product generated by Santa Fe; that is, $3 of every $10 pesos of Value Added that the province generated corresponded to the activity of the agro-industrial chains. If we focus only on the goods-producing sector, and exclude services from the equation, we see that the sector represented 69% of its Gross Production Value in 2020, the highest value reached in the analyzed series. This indicates that the sector is extremely important for Santa Fe if we compare it with other regional economies such as Mining and Oil in the provinces of Neuquén (39% of GDP) or San Juan (10.4% of total GDP).

It is necessary to clarify that in this calculation only companies and individuals whose activity directly concerns the productive activities of the identified sectors are considered; that is, for example, an accounting consultant who provides his services exclusively to agricultural companies would not be included in this calculation, but rather his activity is considered to be part of the Professional Services category. This implies that the actual impact of the sector is even more important and transversal to the entire provincial economy.

In terms of relative importance, the Manufacture of Food Products and Beverages sector is the one with the greatest weight within the chains in terms of production value, concentrating 45% of the Added Value produced by the Agroindustrial Chains in Santa Fe, this is followed by the Agricultural Crops sector, which accounts for almost 30% of it, with Animal breeding representing just over 11%.

The Agrifood Industry per se, except for the origination of its raw materials, concentrated 54% of the manufacturing sector’s GDP in the reference year. If we add the other sectors related to Agroindustries (i.e. cotton, agricultural, tobacco, and wood industries, among others), 69% of the manufacturing sector in Santa Fe is presented. That is, $2 of each $3 pesos in added value generated by the Santa Fe industry corresponds to manufactures of agricultural origin.

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

Photo: REUTERS/Stringer

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Harvest of 2021/22 maize progressing at good pace

The maize campaign officially started a month ago and has already reached over 21% of the intended area. For their part, exports of the SB complex in March focused on shipments of by-products.

Threshing rate in cornfields remains above what was recorded in the past cycle. Up to April 7^th, according to the data reported by the Ministry of Agriculture, Livestock, and Fisheries (MAGyP), 21% of the 2021/22 maize campaign has already been harvested, 8% above the last campaign. At the same time, the early start of the current cycle should be highlighted, to later catch up to the average pace of the last 5 seasons. The current performance is slightly above the average of the 2016/17-2020/21 harvests, since this measure yields a result of 19.6%, almost 1.4 percent below the current records. This progress is equivalent to 2.1 Mil Ha of crops harvested to date, while a year ago there were crops equivalent to 1.2 Mil Ha, a difference of almost one million hectares between campaigns.

According to information from MAGyP at the national level, most regions show a relatively similar progress to last year, although there is a considerable difference in the province of Córdoba. There, 17% of the crops have already been harvested, 12% above the meager 5% that occurred in 2021. For its part, Santa Fe province progressed on 59% of the hectares destined for cereal, while in the last campaign had harvested a similar 57% of said area. Yest, it should be noted that at a provincial level, Santa Fe registered a rise in the area sown with cereal of almost 10.5% between campaigns.

Meanwhile, with the last week’s frost, damages have been recorded in different regions of the country, presenting the possibility of production reductions, mainly in second-and late-season cereal crops, though SB would be the crop mostly affected. As reported by the Argentinian Strategic Guide for Agriculture, the fear is that in the affected areas the frost will subtract kilos by interrupting the filling of grains. In addition, it should be noted that the majority of the core region was affected by this climatic event.

Regarding SB threshing, according to preliminary data from the Strategic Guide for Agriculture (GEA) of the Rosario City Stock Exchange (BCR), this would exceed 1.4 million hectares in the core area as a result of the absence of rains. Yields are a positive surprise in Pergamino, where they average 4.5 MT/Ha, when a month ago they were estimating just 3.3 MT/Ha, while the average total SB yield stands at 3.1 MT/Ha.

Final numbers for the 2020/21 soy campaign

With March ends the 2020/21 SB campaign, where the international trade of Argentine by-products moved in different directions. According to preliminary data from NABSA, on the one hand, SB oil shipments abroad fell by almost half a million tons, going from 6 Mil MT in 2019/20 to 5.5 Mil MT in 2020/21, a decrease equivalent to 9.8% between campaigns. However, this record implies the third-highest level of oil exports of this oilseed for our country, just above 5.4 Mil MT of the 2015/16 cycle and exceeding the average of the last 5 campaigns (5.2 Mil MT). However, it’s worth highlighting that as a consequence of the production drop estimated for the 2021/22 campaign, SB oil exports are estimated at 5 Mil MT, suggesting a further decrease of 500,000 tons. (-10%).

As a counterpart, exports of SBM/pellets/expellers presented an increase of 3.5 Mil MT to finally position themselves at 28.6 Mil MT, above the 2019/20 campaign, while this record placed the result of the campaign passed just 300,000 tons below what was exported during the 2018/19 cycle, 28.9 Mil MT. This way, the average of the last 5 campaigns (28 Mil MT) is exceeded by almost 600,000 tons. However, as in the case of vegoil, exports of meal/pellets/expellers for the 2021/22 campaign are estimated at 24.9 Mil MT, which would mean a decrease of almost 3.7 Mil MT, being a similar drop to which it was registered between the 2018/19 and 2019/20 campaigns.

The international market

In the international sphere, the information corresponding to the survey of sowing intentions of the United States and the surveys of grain stocks surprised a good part of the economic agents, since smaller areas for maize were reported, and higher in the case of SB. This trend is replicated in different parts of the world, given the strong shock that the input market had in recent weeks. With data on stocks that moved in a similar direction (higher SB stocks and lower maize availability), the reaction of foreign prices was a relative reduction in oilseed and its by-products, while cereal prices rose.

According to the survey carried out by the United States Ministry of Agriculture (USDA), an area equivalent to 36.2 Mil Ha in the US would be allocated to maize, falling 1.6 Mil Ha from one campaign to the other (- 4.2%). At the same time, this record is the lowest since 2018 when 36 Mil Ha were planted in the United States. In addition, the average of the last 5 campaigns is 36.6 Mil Ha, so the 2021/22 campaign would be positioned also below this average record. This situation, added to the drop in North American inventories of the cereal, reduces the production threshold for the estimates of the next harvest.

On the other hand, SB saw an increase in the projected area in the report released last week, predicting record production intentions for the next campaign. The sowing intention of the producers would be close to 36.8 Mil Ha for the production of soybean, which represents an increase of 3.5 Mil Ha between campaigns. In addition, not only is it above the average of the last 5 crops, but it would also set a historical record for the US, being the largest area devoted to SB in its history. At the same time, taking into account the good processing performance that is currently present in the US, this would suggest a greater supply capacity to its local market, while it would offset part of the production decreases in South America as of September.

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

Photo: REUTERS/Stringer

For more info visit

https://www.linkedin.com/company/wbl-shipping-agency/

Good progress of the 2021/22 maize harvest

The maize campaign officially started a month ago and has already progressed over 21% of the intended area. Meanwhile, exports of the SB complex in March focused on shipments of by-products.

Threshing in cornfields maintains a higher rate than what was recorded in the past cycle. Up to April 7^th, according to the data reported by the Ministry of Agriculture, Livestock, and Fisheries (MAGyP), the 2021/22 maize campaign has already been harvested by 21%, 8 percent above the previous campaign. At the same time, the early start of the current cycle should be highlighted, to later catch up to the average pace of the last 5 seasons. The current performance is slightly above the average of the harvests that go from 2016/17 to 2020/21 since this measure yields a result of 19.6%, almost 1.4 percent below the current records. This progress is equivalent to 2.1 Mil Ha of crops harvested to date, while a year ago there were crops equivalent to 1.2 Mil Ha, a difference of almost one million hectares between campaigns.

According to information from MAGyP at the national level, most of the regions maintain relatively similar progress to last year, although there is a considerable difference in the province of Córdoba. There, 17% of the crops have already been harvested, an increase of 12 points compared to the 5% that occurred in 2021. For its part, Santa Fe province progressed on 59% of the hectares destined for corn, when in the 2020/21 campaign had harvested 57% of said area. Likewise, it should be noted that, at the province level, Santa Fe registered a rise in the area sown with cereal of almost 10.5% between campaigns.

At the same time, with the last week’s frost, damages have been recorded in different regions of the country, presenting the possibility of production reductions, mainly in second-and late-season cereal crops, although SB were the crop that was relatively most affected. As reported by the Strategic Guide for Agriculture, the fear is that in the affected areas the frost will subtract kilos by cutting the filling of grains. In addition, it should be noted that the majority of the core region was affected by this climatic event.

Regarding SB threshing, according to preliminary data from the Strategic Guide for Agriculture (GEA) of the Rosario Stock Exchange (BCR), this would exceed 1.4 million hectares in the core zone as a result of the absence of rains. Yields are a positive surprise in Pergamino city, where they average 4.5 MT/Ha when a month ago they were estimated at 3.3 MT/Ha, while the average total SB yield stands at 3.1 MT/Ha.

What were the final numbers for the 2020/21 soy campaign?

With the end of March, the 2020/21 soy campaign ends, where the international trade of Argentine by-products moved in different directions. According to preliminary data from NABSA, on the one hand, SB oil shipments abroad fell by almost half a million tons, going from 6 Mil MT in 2019/20 to 5.5 Mil MT in 2020/21, a dip equivalent to 9.8% between campaigns. However, this record implies the third-highest level of oil exports of this oilseed for our country, just above 5.4 Mil MT of the 2015/16 cycle and exceeding the average of the last 5 campaigns (5.2 Mil MT). However, it must be taken into account that as a consequence of the production drop that is estimated for the 2021/22 campaign, SBO exports for the cycle that has just started are estimated at 5 Mil MT, suggesting a further decrease of 500,000 tons. (-10%).

Meanwhile, exports of SBM/pellets/expellers presented an increase of 3.5 Mil MT to finally position themselves at 28.6 Mil MT, being above the 2019/20 campaign, while this record placed the result of the campaign passed just 300,000 tons below what was exported during the 2018/19 cycle when 28.9 Mil MT were exported. Likewise, with this figure, the average of the last 5 campaigns (28 Mil MT) is exceeded by almost 600,000 tons. However, as in the case of oil, exports of meal/pellets/expellers for the 2021/22 campaign are estimated at 24.9 Mil MT, which would indicate a fall of almost 3.7 Mil MT, being a similar drop to which it was registered between the 2018/19 and 2019/20 campaigns.

What happened in the international market?

In the international scenario, the information corresponding to the survey of sowing intentions of the United States and the surveys of grain stocks surprised a good part of the economic agents, since smaller areas for maize were reported, and higher in the case of SB. This trend is replicated in different parts of the world, given the strong shock that the input market had in recent weeks. With data on stocks that moved in a similar direction (higher SB stocks and lower maize availability), the reaction of foreign prices was a relative reduction in oilseed and its by-products, while cereal prices rose.

According to the survey carried out by the United States Ministry of Agriculture (USDA), an area equivalent to 36.2 Mil Ha in the US would be allocated to maize, falling 1.6 Mil Ha between campaigns (- 4.2%). At the same time, this record is the lowest since 2018 when 36 Mil Ha were planted in the US. In addition, the average of the last 5 campaigns is 36.6 Mil Ha, so the 2021/22 campaign would be positioned also below this record. This situation, added to the drop in North American inventories of the cereal, reduces the production threshold for the estimates of the next harvest.

On the other hand, SB saw an increase in the area estimate in the report released last week, predicting record production intentions for the next campaign. The sowing intention of the producers would be close to 36.8 Mil Ha for the production of the oilseed, which represents an increase of 3.5 Mil Ha between campaigns. In addition, not only is it above the average of the last 5 plantings, but it would also set a historical record for the US, being the largest area devoted to SB in history. At the same time, taking into account the good processing performance that is currently present in the US, this would suggest a greater supply capacity to its local market, while it would offset part of the production decreases in South America as of September.

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

Photo: REUTERS/Stringer

For more info visit

https://www.linkedin.com/company/wbl-shipping-agency/