Exports of grain and soya from South America are predicted to remain high overall in 2016.After a massive surge in volume last year, the total could remain at about the same level, exceeding 170mt (million tonnes), based on recent forecasts. This quantity, comprising almost one-third of world trade in these commodities, is equivalent to over 3,400 Handymax size bulk carrier cargoes.

The largest part of exports from Brazil and Argentina consists of soyabeans and meal, about two-thirds of the total. The balance is mostly corn, plus some wheat and other grain types. Brazil is the biggest of the two suppliers. Growth in regional exports during the past decade has been remarkably strong.

Forecasts prepared last month, summarised in the table below, provide a guide to changes unfolding. However, as last year demonstrated dramatically, expectations sometimes change greatly as the season progresses. Estimates for harvests now under way in South America, and calculations for export sales may be revised. Assessments of global import demand, and how much will be purchased from competitors in other countries are subject to constant modification.

A BRIGHT OUTLOOK

Following the huge increase in cereals and oilseeds shipments from both Argentina and Brazil seen in 2015, this year’s volume may be marginally lower, by about 1%. Based on an analysis of US Dept of Agriculture figures, last year’s South America total was just over 175mt, a 29% expansion, and a similar 173mt is predicted for the current period.

Several separate USDA forecasts published in mid-April have been used for these calculations. But marketing periods for cereals and oilseeds exports differ slightly, and so the calculated total is not as precise as it may appear. Marketing periods differ mainly because harvest timing varies.

Nevertheless, the result is a broad indication of what can be foreseen currently. Twelve months ago a roughly 5% increase was expected in 2015, but the upsurge proved far stronger, emphasising how circumstances may change.

LOWER GRAIN EXPORT VOLUMES

The annual crop production cycle in South America starts with Argentina’s wheat harvest. Output in the latest harvest completed several months ago was lower then seen twelve months earlier, at 11mt, reflecting a reduced crop area. However, exports in the marketing year ending November 2016 are expected to be 42% higher at 7.5mt, resulting from enhanced competitiveness.

Corn and sorghum production in Argentina this year is now approaching completion and is estimated to total just below 32mt, about 2% lower than the previous harvest. Crop yields (amount produced from each unit of land) appear to have decreased slightly. Exports in the marketing year ending February 2017 could remain stable at 20mt, similar to the

preceding volume.
During the past few years corn exports from Brazil have risen

massively, becoming a major part of the regional and global export scene. In 2016, corn production from two separate crops could decrease marginally by 1% to 84mt, although that figure is about twice the volume produced a decade earlier. Exports, however, are unlikely to be as high as the over 34mt seen in the year ending March 2016, and USDA forecast a 28mt total, 19% lower, in the current period.

HIGHER SOYABEANS AND MEAL EXPORTS

Last year sales of soyabeans and meal from South America, to a wide range of countries, jumped by a remarkable 20mt or 21%, reaching 114mt. In 2016 exports could be about 2% higher at 116mt. Brazil and Argentina compete strongly with other suppliers, principally the USA, in many export markets and global import demand continues to expand robustly.

In the current harvest, Brazil’s soyabeans output looks set to increase further by around 3%, compared with the previous crop, reaching the symbolic 100mt level. Continued growth in the area under cultivation has assisted the upwards trend. Beans and meal exports in marketing year 2016/17 ending January could rise by 5% to just over 73mt, based on USDA’s estimates.

Argentina’s soyabeans production in the current harvest, by contrast, seems likely to decline by about 4% to 59mt amid slightly lower crop yields. Localised excessive rainfall appears to have adversely affected production. During the marketing year ending March 2017, beans and meal exports could be about 2% lower at 43mt.

SOLID GLOBAL IMPORT DEMAND

Exports from South America depend upon several factors. The availability of grain and soyabeans in the latest harvests is a crucial element. Competitiveness among suppliers is also relevant and, ultimately, consumption trends and reliance on foreign supplies in importing countries determines the pattern.

Currently there are contrasting changes among importers. In the wheat and coarse grains sector, signs of reduced import demand in China and the Middle East area have been prominent. Good harvests of domestic crops within importing countries last summer led to some easing of import requirements, exacerbated by over-abundant corn stocks in China.

From mid-2016 onwards the picture is less clear. Domestic grain harvests in northern hemisphere importing countries (not yet accurately predictable) will affect how much grain is subsequently purchased.

Import changes in the soyabeans and meal sector are mainly positive. Presently, a rising trend is still clearly evident in China, which relies on imports for most of its supplies, amid strengthening soyameal and oil usage. Elsewhere around the world soya import trends look favourable. Richard Scott