Thursday, July 5, 2012

Soybean Planting's Fast Growth in Uruguay

The historically high prices moved actively into Uruguayan soybean market again, and this situation attracted the farmers in Uruguay to participate in the soybean planting. In May 2012, in Nueva Palmira, a main grain port in the country, the purchasing price of soybean was as high as USD540/t. The strong price of soybean in Uruguay happened once in 2008, which was about USD614/t, according to CCM International’s June issue of South America Crop Protection Monthly Report.

Recently, in Uruguay, 30% of the soybean has been harvested with a yield higher than expected (above 1.78 tonnes per ha.). This good result is mainly contributed by the effects of late rains in May 2012. Compared with the situation of Uruguay, 80% of soybean has been harvested in Brazil with a yield of 2.60 tonnes per ha., but in Argentina, because of the heavy rain hindering the harvesting process during Q2 2012, only 50% has been harvested with a yield below expectation, which is estimated at about 2.39 tonnes per ha.

"For soybean farmers, it is an excellent opportunity to capitalize and prepare for the next planting in 2012/13," said Gonzalo Gutierrez, head of the Agro-business Department from the Agriculture School in Uruguay. The strong price of soybean in Uruguay and the promising harvesting result will promote more Uruguayan farmers to involve in soybean planting.  

According to a new estimation released by USDA in May 2012, the planting area of soybean in Uruguay during 2012/13 will be at the peak of 950,000 ha., 50,000 ha. higher than that in 2011/12. Soybeans are set to establish several records in Uruguay in 2012: it is estimated that Uruguay's export value of soybean will be above USD1 billion; meanwhile, it is the first time that soybean will overtake beef as the leading export item in Uruguay in 2012. It is forecasted that soybean's planting area will be over one million ha. in 2013/14. 

In fact, farmers in Uruguay are more and more energetic to plant soybean instead of other crops. On one hand, for the international market, the increasing soybean demand from China boosts the export volume of soybean in South America, which is one of the main planting areas of soybean in the world, especially in 2012; Uruguay is expected to export more soybeans to China to meet the soybean demand because of the decreasing production in Argentina. On the other hand, some domestic factors drive Uruguayan farmers to be involved in soybean planting.
Firstly, increasing construction of new soybean squeezing facilities and biodiesel plants results in the increasing soybean demand in the domestic market. In 2007, National Administration of Fuels, Alcohol and Cement (ANCAP) of Uruguay published a law that mandated diesel shall be mixed with 5% biodiesel beginning from 2012. Furthermore, the gasoline shall be mixed with 5% bioethanol in 2015. Recently, biodiesel is mainly produced from soybean in Uruguay, which means that the domestic consumption of soybean will be largely increased by the policy enforcement.
Secondly, wheat or corn farmers in Uruguay are pessimistic about their profit margin of their produces, because the prices of wheat and corn are not as attractive as that of soybean and the market outlook is not so promising. "Much wheat remains unsold and market price prospects are not encouraging as a year ago, when prices were significantly higher," said Gutierrez. In fact, due to the high storage and the increasing production of wheat, the wheat price becomes unattractive compared with soybean whose price is at a high level recently. Those wheat or corn farmers prefer to rent land for the soybean production, and even rent land to Argentine for soybean planting. 

Source: South America Crop Protection Monthly Report 1206

Content of South America Crop Protection Monthly Report 1206:
Argentine sunflower to play increasingly important role in global market
Soybean planting's fast growth in Uruguay
CNA officials visit Chinese ports and hope to improve Brazil ports
Brazilian farmers win lawsuit against Monsanto to return royalties paid
ANVISA refutes complaint on slow process of agricultural chemicals registration
Federal judge in Brazil maintaining use of MSMA
Monsanto shows new technology in Agrobrasilia 2012
Dow AgroSciences to launch first five-gene trait stack technology
Syngenta and Buck Semillas sign cooperation agreement in Argentina
USDA publishes new estimation of soybean and corn production in Brazil and Argentina

South America Crop Protection Monthly Report, a monthly publication issued by CCM International on 30th(31st) of every month, brings you the latest information on new company dynamics, new policies, new market trends, new technology, International trade in the South America crop protection market.

About CCM
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