Exports of soya and grain from South America in 2014 could be almost as high as last year’s record 140mt (million tonnes) total. This volume comprises a large part, around 30%, of annual global trade in these commodities. The shipments have a huge impact on the many ports in Brazil and Argentina which handle cereals and oilseeds, and on demand for bulk carrier shipping capacity.
Wheat, corn and sorghum exports could decrease this year, after reaching 51mt in the previous twelve months. But soyabeans and meal sales are set to grow strongly from last year’s 89mt, enabling the 2014 total to remain solid.
Forecasts prepared last month, summarized in the table, provide a guide to changes. However, expectations for harvests now under way in South America may change during the harvesting period. Estimates of global import demand, and expectations for competing suppliers in other countries, are constantly being modified also. Thus figures showing an almost unchanged overall total for South American soya and grain exports are provisional.
During 2014 exports of wheat, corn and other coarse grains, plus soyabeans and meal, from Argentina and Brazil, could total 138mt. This quantity is just 2mt or 1% below the impressive 2013 total which, in turn, was 5% above the preceding year’s figure.
Several separate US Dept of Agriculture forecasts, published in mid-April, have been combined to produce this overview. Slightly differing marketing year periods are used for oilseeds and cereals exports in the two main South American supplying countries. So the calculation is not as precise as it seems at first sight. Marketing periods differ mainly because of the varying timing of crop harvests.
The calculations provide an indication of what can be expected, based on current evidence. Changes clearly shown are lower wheat and corn exports from both countries (wheat is a minor element), contrasting with much higher soya shipments from both countries.
PROSPECTS FOR WHEAT AND CORN
Wheat harvesting in Argentina starts South America’s annual cereals and oilseeds production cycle. The Argentine wheat harvest completed in early 2014 was an estimated 13% above the preceding crop at over 10mt, because of improved crop yields. But exports in the year ending November 2014 are likely to fall by 17%, to only a small 3mt volume.
Corn and sorghum production in Argentina’s 2014 crops now approaching completion is estimated to fall by over 4mt (12%) to 28mt, amid lower crop areas. In the marketing year ending February 2015, exports are forecast at 18mt including 16mt corn, a 2mt (12%) reduction.
Brazil’s corn sales have become a very prominent part of the regional export picture in the past few years, exceeding those of the traditional exporter, Argentina. Corn output in Brazil,
derived from two separate crops, is likely to be sharply (12%) lower in 2014 at 72mt, and USDA is expecting a 20% fall in sales to foreign markets during the year ending March 2015. From the previous year’s 25mt, exports could be down to 20mt. Brazil’s wheat is a relatively minor element, with output of around 5mt annually and small exports.
SOYABEANS AND MEAL OUTLOOK
Sales of South America’s soyabeans and meal to markets around the world rose strongly last year to 89mt, a 21% increase.This volume is expected to be surpassed in the current year. Combined exports from Argentina and Brazil are set to rise by over 7mt (8%), reaching 96mt. The upwards trend demonstrates strong competitiveness in many markets, including China where import demand is still expanding robustly.
Although some adverse weather has been experienced (excessive rainfall in one area, following earlier extremely hot and dry conditions elsewhere), Brazil’s soya production in the current harvest looks set to be about 7% higher at 87mt. Beans and meal exports in the 2014/15 marketing year ending January could be up by 2mt (3%), at 58mt, based on USDA’s estimates.
An increase in Argentina’s soya harvest seems likely as well, by 10% to 54mt, benefiting from an enlarged crop area and improved growing conditions. During the marketing year ending March 2015, beans and meal exports could be over 5mt (17%) higher, at 38mt.
BRISK IMPORT DEMAND
A number of factors affect export forecasts. These are not determined solely by the producing countries’ outputs and surpluses. Likely import demand in a wide range of foreign markets over the twelve months ahead is one key aspect. Also, crucially, competition from other suppliers is a prominent element. Brazil and Argentina compete with the USA and many other producers.
Global soyabeans and meal import demand is evolving positively. Signs of expanding purchases are clearly visible, especially in China but also in many other countries. Other Asian importers, the Middle East area and Europe are seen as supporting a robust increase in trade.
Wheat and coarse grains import demand currently is rebounding strongly, after a minor setback. A large jump in China’s requirements is being accompanied by increases in many countries around the world. From mid-2014 onwards, progress is more difficult to foresee.Any significant changes in output from summer domestic harvests in northern hemisphere importing countries, which are not yet predictable, will have a large impact on import demand.
Several potential changes among exporters could affect South American sales in the second half of this year. New crop US grain and soyabeans availability, and Black Sea grain supplies will be very influential. Richard Scott