With 8% more soya beans and 12% more maize to be produced in Brazil this year compared to 2011, and with most of the extra available for export, up to 57mt (million tonnes) of the two products will be exported this year, 12%, or 5mt more than in 2011.
On the other hand, little or no more sugar will be exported in 2012 than the 26mt shipped last year, when adverse factors meant 2mt, or 8%, less sugar was shipped compared to 2010.
With a new 1.5mt pulp mill only to start up at the very end of this year, the first for two years, 2012 will see a repeat of the 8.8mt of pulp shipped in 2011. A 10% fall in the price of pulp may cause other projects to be delayed.
Because many farmers preferred to plant soya or maize than rice last year, there will not be a repeat of the million tonnes of rice exported in 2011.
As usual, Brazil will import far more wheat than it exports this year. In 2011, twice as much came in than the 2.5mt shipped. About half a million tonnes of cotton will be exported this
year and there is likely to be a repeat of the export of about 550,000 tonnes of tobacco, although much of the tobacco is now shipped in containers, rather than as breakbulk.
With few signs of a recovery by the construction and furniture industries in the United States and elsewhere, there is unlikely to be an upturn in demand for wood and processed timber this year. A repeat of the 2.6mt shipped in 2011 seems most likely, a far cry from the 6mt to 7mt exported in 2005 and 2006.
Soya growing in Brazil.
Record prices during most of 2011 explain why farmers planted more soya and maize at the end of last year and why the amount of land planted to maize as a winter crop, to go into the ground as soon as early soya is harvested, will be a record as well.
As well as planting the two grains on up to 5% more land, farmers have bought more fertilizer and lime, have had more money to spend on farm chemicals and machines, and are looking after their plantations better, so yields will be above average.
The only bad news is that an increasingly strong ‘La Nin~a’ phenomenon, which as well as prejudicing yields in much of Argentina, Paraguay and Uruguay, also meant that little rain fell in December in most of Rio Grande do Sul, as well as much of Parana, could cut yields. This will be particularly true if, as feared, the dry weather persists during January, when soya beans and corn cobs fill out.
Prices of the two key commodities started to fall in August last year, but have since recovered on the news of the dry conditions, as world stocks are still relatively low.
China will be the leading destination for Brazilian soya beans this year, taking more than 22mt.
China is also the leading market for Brazilian soya oil, of which less is now exported as five years ago, due to increasing quantities being used to make bio-diesel fuel.
In contrast to beans, up to half of the 14.5mt of soya meal to be exported this year will go to destinations in Europe, with the Netherlands, Germany and France in the lead. About 5mt of soya beans were sold to EU countries as well last year, but only two of them, Spain and the Netherlands, bought more than 1mt of beans. No other country bought more than 900,000 tonnes of beans.
The market for Brazilian maize, a comparatively recent export, is far more fragmented, although Iran remains the leading customer. Brazil’s large poultry, pork, dairy and beef herds, together with industry mean 50mt of maize is now needed in Brazil itself each year. Domestic demand increases by about 3% a year, so there is relatively little left over for export.
Most of the 10mt of maize to be exported, is grown in the winter months in centre west. It is planted immediately after the early soya is harvested, taking advantage of the moisture which remains in the soil.
Brazil’s sugar industry still has to recover after three very poor years.
The industry almost doubled in size between 2005 and 2008, when more than 100 large new mills were started up, and the cane crop doubled to more than 500mt.
The new mills, plus planting three million hectares to cane for the first time, cost about $50 billion. However, expenditure peaked in 2009, when the financial crisis caused prices of both sugar and ethanol to fall sharply.
Cash strapped mills were forced to sell ethanol below cost, which made the fuel very attractive to motorists, but worsened the financial position of the mills.
With few resources, mills neglected to renew their elderly plantations, causing yields to fall. Coupled with three years of adverse weather, the output of cane has stagnated.
The industry has been saved by the high world price of sugar, of which about a quarter of the total produced worldwide is Brazilian. About 50% of the 60mt traded around the world each year normally comes from Brazil as well. Because of difficulties last year and despite the mills giving priority to making sugar, rather than ethanol, Brazil shipped 2mt less than in 2010.
If Brazil is to maintain its share of the world market, at least 20mt more sugar will have to be produced by 2020. It remains to be seen whether this will actually happen.
To maintain its dominant position, the countries pulp industry also needs to add 10mt of capacity by 2020. Although half a dozen new mills are planned, it is not now certain all will be built in time.
Two of the leading companies, Fibria, formed of the merger of VCP and Aracruz, plans to duplicate its 1.5mt capacity mill at Tres Lagoas in Mato Grosso, while Suzano also plans three new mills.
But because the Brazilian Real fell by 12% against the US$ last year, and 90% of Fibrias large debt is denominated in US dollars the companies financial position is not good, so the new mill may not start up on time. The same thing applies to the Suzano company, which plans to build three new mills in the north east of Brazil, in Maranhao and Piaui states, where land is now much cheaper than where its existing mills are located.
To start up at the end of this year, the 1.5mt-capacity Eldorado mill is being built in Mato Grosso do Sul, by a subsidiary of the JBS meat company, the world’s largest meat packer.