Another remarkable record-breaking volume of soya and grain exports is predicted for South America this year. The total could exceed 140mt (million tonnes), more than 50% above annual quantities seen in the mid-2000s. Wheat and corn exports could decrease, but improved soya harvests are expected to massively boost sales of soyabeans and meal.

Although forecasts prepared last month provide a guide to changes during 2013, expectations for harvests now under way in Argentina and Brazil may change during the harvesting period. Also, perceptions of global import demand, and competition from suppliers in other countries, are constantly being modified. So calculations indicating a 10mt or 7% rise in the region’s soya and grain exports are provisional.

One beneficial development for South American exporters has been tighter world supplies following reduced soyabeans and corn production in the USA last autumn. This tightening is proving particularly advantageous, amid slow expansion of global soya imports, and an actual reduction in global import demand for wheat and coarse grains.

AN IMPRESSIVE FORECAST

During 2013 exports of wheat, corn and other coarse grains, plus soyabeans and meal, from Argentina and Brazil, are expected to total 143mt, as shown in the table below. This quantity is 9.7mt (7%) above the 2012 total which, in turn, was 7% above the previous year’s figure.

This overview is derived from several separate US Dept of Agriculture forecasts published in mid-April. The calculation is not as precise as it seems at first sight, because slightly differing marketing year periods are used for oilseeds and cereals exports in the two main South American supplying countries. These marketing period differences mainly reflect the varying timing of harvests. But the numbers do provide a useful guide to what can be expected. Changes clearly indicated are sharply lower wheat exports from Argentina, lower corn exports from Brazil, and much higher soya shipments from both countries.

WHEAT AND CORN PROSPECTS

Harvesting of wheat in Argentina starts South America’s annual cereals and oilseeds production cycle. The Argentine wheat harvest completed in early 2013 was almost 30% below the preceding crop at 11mt, because of a lower area cultivated. Consequently export availability was greatly reduced, and exports in the year ending November 2013 are likely to fall by 8mt or 61%, to only a small 5mt volume.

By contrast, corn and sorghum production in the 2013 crops now approaching completion is estimated to rise by over 6mt (26%) to almost 32mt, amid improved yields resulting from good rainfall and growing conditions. In the marketing year ending February 2014, exports are forecast at 22mt including 19mt corn, a 2mt (8%) rise.

Corn sales by Brazil have become a very prominent part of the regional export picture in recent years. Brazil’s wheat is a relatively minor element, with output of around 5mt annually and exports of 2mt. The much larger corn output, derived from two separate crops, is likely to be marginally higher in 2013 at 74mt, but USDA analysts are expecting a 20% fall in sales to foreign markets during the year ending March 2014. From the previous year’s 24mt, exports could be down to about 19mt.

OUTLOOK FOR SOYABEANS AND MEAL

South America’s soyabeans and meal sales to markets around the world fell last year to under 74mt, a 14% reduction. This decline is expected to be more than reversed in the current year. Argentina’s and Brazil’s combined exports are set to surge by well over 20mt, reaching 95mt, a 29% increase. Potential for restoring the upwards trend shows the region’s strong competitiveness in many markets, including China where import demand is still expanding.

Adverse weather last year damaged Brazil’s soya production, but the current harvest looks set to be about one-quarter higher at 83mt, because of a larger crop area and good weather. Beans and meal exports in the 2013/14 marketing year ending January could be up by 9mt (19%), at 54mt, based on USDA’s estimates.

Argentina’s soya harvest seems likely to increase strongly as well, by over one-quarter to 51mt, benefiting from an enlarged crop area and greatly improved growing conditions. During the marketing year ending March 2013, beans and meal exports could be over 12mt (44%) higher, exceeding 40mt.

IMPORT DEMAND ASPECTS

Export forecasts are not determined solely by producing countries’ output and surpluses. Perceptions of how import requirements in foreign markets are likely to evolve over the period ahead, and competition from other suppliers, are key influences. Brazil and Argentina compete with the USA and many other producers.

The global import demand outlook currently is not especially favourable. There are only limited signs of expanding soyabeans and meal trade, mainly in China, while wheat and coarse grains trade is experiencing one of its periodic setbacks, reflecting weaker demand in many regions. However, if there are significant reductions in domestic grain harvests among northern hemisphere importing countries in mid-2013, the scene could become more positive.

Another possible scene-changing event is a rebound in US corn and soya output later in 2013, recovering from last year’s downturn when a devastating drought and extremely high temperatures devastated a large part of the harvest. In the meantime, South American suppliers are in a strong position to expand sales, despite the mediocre import demand picture.

Richard Scott