Another good year for South America’s grain and soya exports is predicted.The 2011 total may increase slightly from last year, when very strong expansion was seen, more than reversing the sharp downturn ocurring in the previous twelve months.
Forecasts are still provisional. Calculations are likely to change as corn and soyabeans harvest results in Argentina and Brazil become clearer. The 2011 overall grain and soya export volume currently is expected to be marginally above last year’s total. That volume was up by 30mt (million tonnes), a one-third increase from 2010, caused mainly by greatly improved weather benefiting crops.
During the present main export season which has already begun, generally firm global demand for new crop supplies should ensure brisk activity at South American loading ports over the months ahead. Bulk carrier employment in these trades will derive advantages. Many trades are long-haul, including exports to China, other Asian countries and Europe.
 
A POSITIVE PICTURE
Exports of wheat, corn and other coarse grains, plus soyabeans and meal, from Argentina and Brazil, could total 121.9mt in 2011, as shown in the table below. This estimate is just 1mt above the 2010 figure. But last year’s volume was a record high, rebounding from the preceding big decline.
The overview is based on several separate US Dept of Agriculture forecasts published in mid-April. Slightly differing marketing year periods are used for the various grain types and soyabeans/meal in the two exporting countries, reflecting mainly minor differences in the timing of harvests. Consequently, the composite annual figures are approximate.
Two notable changes are envisaged for 2011, compared with the previous twelve months. Higher wheat exports from Argentina (a relatively small part of the overall picture) seem likely, while corn exports from Argentina and also from Brazil, are not expected to maintain the very strong levels seen last year.
 
WHEAT AND CORN PROSPECTS
The South American annual cereals and oilseeds production cycle starts with wheat. Argentina’s wheat harvest completed in early 2011 was over one-third higher than crops produced in the previous two years, at 15mt, resulting from an expanded crop area and improved yields. Exports in the marketing year ending November 2011 could be 3.4mt (67%) higher at 8.5mt.
Corn and sorghum production in Argentina’s harvests this year is currently estimated at just under 26mt, a slight decrease of 2%. Although a larger area was planted, insufficient rainfall and excessively high temperatures during the growing season was a severe setback. In the marketing year ending February 2012, exports are forecast at 15.9mt, a 2.4mt (13%) reduction.
Wheat and corn sales by Brazil have become more significant in
recent years. Production of wheat is relatively small, at about 6mt this year, while the much larger corn output (derived from two separate crops) is likely to decrease to an estimated 55mt. During the marketing year ending March 2012, Brazil’s corn exports could fall by 3.1mt (27%) to 8.5mt, based on USDA’s calculations.
 
OUTLOOK FOR SOYABEANS AND MEAL
South America’s soyabeans and meal sales reached a record high 85mt in 2010, after a decade of rapid expansion during which the annual total more than doubled. Last year the volume more than recovered from the previous year’s temporary downturn, with a 20mt (30%) upsurge, to 84.6mt. The 2011 quantity is currently forecast at 87.2mt, a 3% rise. This upwards trend has greatly boosted the region’s significance for the bulk carrier freight market.
In Brazil, continued expansion of the crop area seems likely to result in a further increase in soyabeans output this year, to 72mt (up by 4%). Beans and meal exports in the marketing year ending January 2011 could advance more strongly, by 3.2mt (over 7%), reaching 46.6mt, according to USDA analysts. Partly this reflects an expected slight reduction in Argentina’s soya sales.
Contrasting with Brazil’s performance,Argentina’s soyabeans harvest probably will be lower in 2011, a combination of an unchanged crop area and lower yield.The harvest estimate of 49.5mt (9% lower) shows the consequences of an earlier drought in parts of the country. In the marketing year ending March 2012, beans and meal exports may be reduced by about 2%, at 40.7mt.
 
GLOBAL IMPORT DEMAND
Although export availability is clearly a key factor, South America’s grain and soya sales ultimately will be determined by global import demand, and by competition from other suppliers. Typically, Brazil and Argentina are strongly positioned to compete. Recent world market tightness, amid limited grain supplies and firm demand in many importing countries, should ensure that South American exports are well maintained.
Some uncertainties are evident, however. Prospects for global wheat and coarse grains, and soyabeans/meal, trade beyond the third quarter of this year are still rather unclear. Summer grain harvests in northern hemisphere importing countries, which are not yet accurately predictable, will have a large impact on these countries’ import demand for both grain and soya.
Also, some uncertainty about China’s soyabeans imports over the remainder of 2011 has emerged. Currently continued expansion in annual volumes is envisaged, resulting in Chinese purchases for delivery within the trade year ending September 2011 rising by 13%, to reach 57mt. But if this trend falters, there could be an adverse impact on South America’s sales.
 
Richard Scott