With soybean and maize yields down 37% and 26%, respectively, what to expect regarding grain flow

The 2022/23 coarse crop is expected to be substantially smaller than the lasts 5-year average, affecting grain availability. Extension of 2022/23 maize shipments was allowed. WASDE and a trade week particularly alert to historical rain shortages.

Soybean and maize yields are expected to fall by 37% and 26% compared to the last five-year average. In line with this, as the latest report of the Guía Estratégica para el Agro (GEA – BCR) highlighted, “at the moment there are no climatic conditions in sight that allow to confirm absolute minimums for yields or the area that will not be harvested”. Today we are facing the worst soybean and corn harvests in 15 and 5 years, respectively. By the time soybean harvest ends—around the end of June—the expected harvest volume is currently 37% below this average. This flow is estimated based on the latest GEA production estimates and the average soybean harvest rates of the last five years.

In this context of lower production, another source of supply for the oil industry will be “temporary soybean imports”. Because of this, in February, soybean exports from Brazil to Argentina were recorded at around 226,000 MT, the highest volume of Brazilian soybean exports to Argentina recorded in a single month. It should be noted that this figure corresponds to exports from Brazil and that due to logistics and administrative issues this number may not coincide with the figure for Argentine imports last month, possibly prorated between February and March.

Likewise, the Paraguayan soybean harvest is better than last year, rising from 4 Mil MT in the previous season to almost 9 Mil MT in 2022/23. Thus, soybean imports from Paraguay—which fell to a five-year low last year—are also expected to increase. In a year of enormous complexity, this source supply is expected to help reduce idle capacity in the crush industry.

Extension of shipments of the 2022/23 maize permitted

Resolution 78/2023, published on Tuesday in the Official Gazette, established an exceptional automatic extension of 180 calendar days for maize exports with a shipment period between March 1^st and July 31^st, 2023. The persistent drought, which affects large productive areas of our country, was among the main reasons for this measure.

According to SAGyP data, from the beginning of March to the end of July, we have a maize export volume scheduled for shipment of about 9.9 Mil MT. This is almost 92% of 2022/23 maize exports which has been affected by this measure.

Regarding export sector’s purchases in the domestic market, they have so far acquired 7.9 Mil MT of the 2022/23 campaign; in other words, they still need to buy 2 Mil MT to meet their shipping commitments up to July. However, this does not indicate expected delivery months and, at the same time, a flow of 5.5 Mil MT of 2022/23 maize is expected up to May, not only for export but also for the feed and ethanol industries, among other uses of the cereal in our country.

Commercial corn stocks as of March 1^st are 10 Mil MT according to SAGyP. This is 800,000 MT more than at the same date of the previous year and the maximum since at least the last 8 years. In other words, a good carry of the maize, will surely lend a hand in a year of such production crisis.

Source: https://bcr.com.ar/

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