Higher exports of grain and soya from South America, probably reaching well over 140mt (million tonnes), are predicted for 2015. This huge volume, equivalent to around 2,800 Handymax-size bulk carrier cargoes, comprises about 30% of world trade in these commodities. Ports in Brazil and Argentina, handling cereals and oilseeds, are poised for another dynamic season.
Soyabeans and meal comprises by far the largest part. Shipments of these could reach just under 100mt this year, after growth of 5% from the previous twelve months. Grain shipments, predominantly corn could increase by a similar percentage, to about 44mt.
A guide to changing volumes is provided by forecasts prepared last month, summarized in the table. But expectations for harvests now under way in South America, and implications for export availability, may be revised through the harvesting period. Estimates of global import demand, and predictions for competing suppliers in other countries, are constantly being modified also. Thus the figures for South American exports are provisional.
AN UPBEAT FORECAST
Exports of grain (wheat, corn and other coarse grains), plus soyabeans and meal, from Argentina and Brazil, could total 143mt during 2015. Compared with last year’s quantity, this impressive total is 7mt or 5% higher, resuming an upwards trend after the previous 2% annual reduction
This overview is based on several separate US Dept of Agriculture forecasts, published in mid-April. The marketing year periods used for oilseeds and cereals exports in the two main South American supplying countries differ slightly. Consequently, the calculated overall total is not as precise as it seems at first sight. Marketing periods differ mainly because of the varying timing of crop harvests.
The forecast provides an indication of what can be expected, based on evidence currently available. Twelve months ago the expectation for 2014 was for a 1.4% marginal decline. The outcome was a 1.8% decline. Not all estimates prove to be similarly accurate, however.
WHEAT AND CORN PROSPECTS
Argentina’s wheat harvest starts South America’s annual cereals and oilseeds production cycle. The Argentine wheat harvest completed several months ago was an estimated 19% above the previous crop at 12mt, benefiting from a larger crop area. Exports in the marketing year ending November 2015 are likely to more than double to over 5mt.
Production of corn and sorghum in Argentina this year is now approaching completion and is estimated to fall by 2mt (8%) to 28mt, amid lower crop areas. In the marketing year ending February 2016, exports are forecast at 16mt including 15mt corn, a 2mt (12%) reduction.
In Brazil, corn sales have become a key part of the regional and global export picture within the past few years, exceeding those of the traditional exporter, Argentina. Brazil’s corn output, derived from two separate crops, is likely to be down by about 6% this year at 75mt. USDA expects a small 2% fall in sales to foreign markets during the period ending March 2016, to 20mt.Wheat is a relatively minor element: output is around 5mt annually, and exports are small.
OUTLOOK FOR SOYABEANS AND MEAL
South America’s sales of soyabeans and meal to markets around the world increased rapidly last year to 94mt, a 7% increase. Another rise is expected in 2015, when combined exports from Argentina and Brazil could be 5mt or 5% higher at over 99mt. The upwards trend reflects strong competitiveness in many markets, especially China where consumption and import demand is still expanding robustly.
Brazil’s soya production in the current harvest looks set to show further rapid expansion, rising by about 9% from twelve months ago, to 95mt. Continued growth in the crop area under cultivation has been advantageous. Beans and meal exports in the 2015/16 marketing year ending January could be up by 2mt (3%), at 61mt, based on USDA’s estimates.
In Argentina as well an increased soya harvest seems likely, rising by 6% to 57mt, assisted by good weather and a higher average crop yield. During the marketing year ending March 2016, beans and meal exports could be 3mt (9%) higher, at 38mt.
IMPORT DEMAND SUPPORT
These export forecasts are affected by a number of factors. Changes in the producing countries’ outputs and surpluses are fundamental influences, but are not the sole determinants. Likely import demand in a wide range of foreign markets over the twelve months ahead is another key aspect. Also, Brazil and Argentina compete with the USA and other suppliers.
Positive influences strengthening global soyabeans and meal import demand are prominent. Signs of expanding purchases are clearly visible, especially in China but also in many other countries. Importers elsewhere in Asia, the Middle East area and Europe are seen as supporting robustly increasing trade.
Overall import demand for wheat and coarse grains is currently buoyant after expanding at a fast pace up to mid-2014. China’s requirements are down but rises in numerous countries are more than offsetting. From mid-2015 onwards, progress is more difficult to foresee. Any significant changes in grain output from summer domestic harvests in northern hemisphere importing countries, which are not yet predictable, will have a large impact on import demand.
During the period after mid-2015 South American sales could be affected by changes among exporters. New crop US grain and soyabeans availability, and Black Sea grain supplies will be key factors.
Richard Scott