Market Update: Argentina & Brazil
Agriculture across South America is going from strength to strength. Market growth in recent years has been bolstered in the 2015/16 season by healthy harvests and steady yields.
Harvesting for the summer crops is almost complete, and planting is well underway for next season as farmers enjoy an extended period of dry weather that is allowing fieldwork to continue apace.
Latest grain estimates for the 2016/17 season from the Argentine Ministry show a mixed collection of gains and reductions, but overall paint a positive picture for the country’s growers and traders. Production estimates for wheat are currently showing a rise on last year’s figures, while barley production is predicted to drop.
With agricultural experts operating across the country to support Argentina’s grains industry, we report on our recent findings in this busy and important market.
The ideal window for planting wheat is coming to an end. Planting is complete in the center and southwest of Buenos Aires, and south of La Pampa, but fieldwork is pending in southeast Buenos Aires, especially in the coastal area. Wheat is 99.5% sown, extending to 4.25 million hectares (MH). Of these crops, 44% present very good conditions. The final planted area is estimated to 4.3 MH, which if achieved will be a 19.4% rise year-on-year (YoY).
Good weather conditions have enabled the completion of harvest at a national level. Final production stands at 56 million tons, and nationally, average yields achieved 3.04 tons per hectare, bolstered by excellent productivity in the west of the national agricultural area. Some plots in waterlogged low-lying areas of southeast Buenos Aires remain unharvested, however, they do not affect our final production estimate.
The corn harvest continues apace across the country, with most progress in north-central Córdoba, NEA, NOA and the north and south belts. The harvest of early crops is almost complete, while many late and second crops are still unharvested. Corn is 85.1% harvested (24.3 MT) and the average yield stands at 8.2 tons per hectare. Our final production estimate for the current season is 28 MT.
In recent weeks, clear skies have fostered fieldwork, which is now in its final stage. Barley is 93.5% planted and all pending plots, in southeast and southwest Buenos Aires, as well as south of La Pampa, will be incorporated by month end. Planting is on schedule to reach 950,000 hectares (H), down 20.8% from last season. YoY planting is running later than last year. At this point last year planting had already finished.
Planting is just getting going with fieldwork underway in NEA and north-central Santa Fe, and the center of the national agricultural area will begin planting shortly. Weekly progress stands at 6.4% thanks to adequate/ideal moisture conditions in the north. Sunflower is 14.7% planted, and the final planted area is projected at 1.6 MH.
For the 2015/16 campaign, the weighted average yield of peanut, dry and clean in shell, has been estimated in 3.2 tons/ha. This places production of peanut in shell at about 928,600 tons, around 22% less than the previous year. Peanut grain production has been estimated in 670,600 tons from a harvestable area of 289,370 hectares, having lost 47,000 hectares to weather events.
Difficult weather conditions have made 2015/16 a tricky season, but even so, there are plenty of opportunities in the Brazilian agriculture market.
The El Nino weather effect has negatively impacted two of the country’s main crops this year, soybean and corn. As a result, grain production for Brazil’s 2015/16 harvest reached 186.4 million tonnes, a reduction of 10% compared to 2014/15. The planted area reached 58.3 MH, representing a 0.7% increase compared to the previous harvest.1
For soybean, planting in several states was delayed by unusually dry weather conditions. The delay and subsequent dry conditions have impacted the average yield, which was lower than the previous year. Even with a gain in the area planted, production for 2015/16 is only estimated at 95.4 million tonnes, almost 1% lower than the 2014/15 harvest.
After a good year in 2014/15, corn production in 2015/16 endured a reduction in both the planted area and the yield for the summer crop. For the winter crop (safrinha), even though the planted area increased by some 10.2%, drought stresses resulted in a heavy reduction in yields. This drop has been verified, and total production was reduced by an exceptional 22%. Total production for this year (first and second corn crops) is expected to reach 66.9 MT in the current harvest. Compared to 81 MT last year, this represents an overall reduction of 17%.
Cotton production will be lower than last season. This crop has been affected by a decrease in the planted areas of the North/ Northeast. At the same time, productivity has been adversely affected by a lack of water and high temperatures in region.
Year on year, peanuts are expected to show continued growth, both in planted area and yields. Growth in planted areas is mainly focused in São Paulo state, while the average yield is expected to increase, nationally.
Rice crops have been hit by the impact of reduced planting and excessive rains. The grain’s main producers reduced their planting areas for 2015/16 so a reduced harvest was expected. However, excess rains caused schedules to be reorganized and planting to be completed out of the recommended period (low-light window). This resulted in decreased productivity in the south, especially in Rio Grande do Sul.
For further information, please contact:
Business Manager, Argentina
Business Manager, Brazil
1 CONAB September Report