Your World in Agriculture
Mike McGinnis looks at the global agricultural trends, focusing on Brazil, Argentina and Ukraine.
-Hi, welcome to Your World in Agriculture, I'm Mike McGinnis for agriculture.com. All the markets are in the late November stages and we are really focusing a lot on what the crop weather problems are around the world, not just the planting weather for many countries, but also the growing weather and then, of course, there's a ban on greens coming out of Ukraine and Eastern Europe, we're gonna focus on that on this show today. First of, we bring in a reporter from Gazeta do Povo in the southern part of Brazil to talk about what the current problems are in Brazil as far as planting. We're also hearing some port congestion problems that is resulting in more business for U.S. corn export. So to talk about this, we bring in Igor Castaño, again a reporter from the Gazeta do Povo newspaper in the state of Parana. Igor, first of, tell us what is the current situation as far as planting progress for soybeans in Brazil. -Okay, we have different situations in planting progress here in Brazil. For example here in Parana, about 97% of corn [unk] and at this present about 94% I consider in good condition until this moment. For soy, about 80% of the area is already planted. What represents about 3 million and 600,000 hectares until the last week that hasn't been planted? By this [unk] in most cultures, soy and corn, there are no big problems in the farmers with that region. There's no problem on the planting progress. In Rio Grande do Sul, on the other hand, the situation is a little different. [unk] producer in southern region of Brazil, about the beginning of planting here it wasn't so fine. They earlier started this. People who see the first soy in part of here in [unk] they had to replant with water in some areas. But in southeast, the farmers didn't have time to replant at this time so they tend to direct into soy. The rhythm of planting in east is slow compared like for example to Parana -Uh huh. -so they will have to run in order to complete the planting [unk] Mato Grosso. They're so important producer in [unk] of Brazil. The planting process is happening without any problem until the last week about 77% of the area was planted. That represents about 6 million hectares that's already are planted. The rhythm is considered reasonable by producers and the prediction for this year is better than last year in comparison where they had more problems. But they believe that until the end of this month, the plantation will be good in Mato Grosso. -Okay, so recapping, you're saying that basically 80% of the-- 80% of the soybean crop is planted. There was some-- There were some problems in Rio Grande do Sul, which for those who don't know, it's in the southern part of the country and Igor is also saying to us that the planting in Mato Grosso in that season seems to be going fairly well right now after getting up to what was a rocky start. -Yeah. -And Igor, we also wanna talk about the port congestion problems in Brazil. This is causing some of your Asian customers to turn to the U.S. for the emergency purchases of corn so good news for the U.S. because exports are getting stronger here. But what seems to be the problem at the ports in Brazil? What is the problem and what's being done about it? -[unk] is as far [unk] that produce more in Mato Grosso. Unlike in [unk] Brazil depends-- the administration depends much more of roads, of the trip to [unk] harbors and there are basically not many options to sell these products out going to harbors [unk] another options that the effect [unk] is really a problem, but they are trying to-- There's no practical solution. They had to wait for some growth to the southwest [unk] the administration. There is no practical solution from here. -Okay, very good. Recapping, then he's saying that there's too much production frankly out of Mato Grosso, that crop comes down to the port and they can't handle how much is coming in plus they have problems with their vessels, getting the craft out into their Asian customers and he's also saying, if I understood you correctly Igor, that there really isn't an answer right now. Igor, thanks for your time. We appreciate it. -Okay, thank you. -Thank you very much. Igor Castaño from the state of Parana in Brazil. He is a reporter with the Gazeta do Povo newspaper. Coming up, we're gonna be speaking with an economist from Argentina and that country, of course, starting out the season with a lot of flooding, a lot of problems, a lot of replanting there. So again, all eyes are on Argentina as well this crop production season, standby. We continue our conversation about crop production problems around the world. We go now to Argentina where we speak with market advisory economist in Rosario, Pablo Fraga. We bring Pablo in via Skype now to talk about the production problems of Argentina has experienced this year, of course, flooding to start with, but Pablo first of, thanks for joining us in sharing your perspective over the crop production in Argentina this year. -Thank you very much Mike for the contact. -Let's talk about first of the planting of soybeans this year was really tough the start of the season because of flooding. Where are you now? Gave us percentage of planting that's been completed and what seems to be the weather conditions and weather pattern going forward into December. -Well, this season didn't start very, very good, but in September now we are having a delay in planting or less 15 points of late compared to past year. We are talking about near 20 million hectares that are going to be planted so we have only 22% plants. I am clear? -You are very clear. I understand that and so you're crop production estimates-- the crop production estimates in Argentina gave us those for both, start up with soybeans if you will and corn. As I understand it, your estimation for this year's soybean crop is about what the USDA is saying in the corn production though will be lower than what the current USDA estimate is. Go ahead and give us your estimates if you would please. -We don't have an official soybean estimation right now. The only estimation is the one of the Department of Agriculture in United States talking about something like 55 million tons. We still don't have an official estimation because we don't know exactly how many hectares will be planted. But if we take this estimation of near 20 million hectares, we bring about the best year we ever had. We got about the same estimation at the Department of Agriculture in United States is making. However, I don't think we are going to reach that because we have floods in many areas. Right now in this half of November, we have some [unk] problems about having complications to start planting. The field is a little bit dry and under that you can have some good soil, but when they thought of field you need to replant the seed. It's not [unk] the farmers want so probably that will get our complications so if we take into account, there is too much water in August, September and October. Now, these kind of complications in some farms I can assure you that we are not going to have that estimation the Department of Agriculture making, that 55 million tons. -And as for soybeans, what will be our Argentina's corn production this year in your opinion based on the planting problems and the growing problems you had so far? -Well, this is may be less accurate than in soybean because as I have told you earlier, here we have first-hand core and second-hand core. The second-hand core is planted in late December so until the month of January, we are not going to know how many hectares of corn do we actually have. So, we will have to wait. But if we make an early estimation taking into account, the best yield we ever have we can talk about 26 million tons. So, if the Department of Agriculture in the U.S. is thinking about 28 million tons, I think that figure is a little bit high for us. I believe that whether we could have between 23 and 26 million tons. -Okay, so we're talking about the shorter soybean crop then the USDA is projecting in a shorter corn crop, then what the USDA is projecting. So finally, give us your feel for what the farmers. You go out and talk to a lot of folks Pablo in Argentina a lot of farmers. What is their feel as far as the crop going into the ground, and marketing wise, have they already sold their 2013 crop or will they wait? -Okay, the soy bean, this year they only sold little more than on 3 million tons so we're talking about crop of 50 million tons. They have sold less than 10 percent and compared with after years, that theory is very, very [unk]. Departments don't want to sell soybean and they are not going to lead now when the prices are coming down so probably we will have to wait the market to get stronger and the weather to get-- to get better so if-- if both things are now, maybe next month, farmers are going to start selling more soybean. At this time, the amount of soybean that has been sold is very few compared with other year. -Okay. -I'm talking about corn. Corn is a very strange thing here in Argentina because our market, the government is always-- is always making regulations for the market so it's a little bit complicated here. But this year, particularly this year, the government announced to open the export in 15 million tons of corn. They did that before plant-- The market now is very wide and we are receiving good prices here in Argentina. On first half, we had sold 9 million tons of corn and it's something that we haven't seen in another years because the other years the market was not open, it's now. So, now we have competition between-- between the exporters and we are seeing very good price so the farmers try to sell as much corn as they can. -All right very good. Well, that's interesting right there as Argentina may be putting more corn on the export market and, of course, we'll see, you know, what the export market does bring for the U.S. corn price going forward towards the end of the year. Pablo, thanks for your time. Thank you. -Okay, Mike, see you there. -Yes. That's Pablo Fraga. He is a market economist at a market advisory service in Rosario, Argentina. Coming up, will Ukraine implement their wheat ban? We'll talk about that and more after this. A lot of traders say wheat is the next commodity that could rally at the Chicago Mercantile Exchange and that's due to the drought conditions that hit countries like Ukraine and Russia and other countries around the world that have had wheat production problems. So we bring in an ag economist from Ukraine. His name is Yuri Mikhailov. He is an ag economist for a monthly magazine in the Ukraine and first of, Yuri give us some feel for what stage you're in, in that country as far as production is harvest over with and what is the current weather pattern? At the moment, the unharvested remained only some, not very big batches of corn and sugar mill. Actually, at the moment, the seeding of winter crops for the next year had been finished. The weather pattern is gonna bring now about 32 degrees Fahrenheit. That's 0 degree centigrade and the weather in Ukraine actually is very much like weather in North Dakota [unk] -Okay, so the winter seeding is going on and nearly-- -No, seeding for winter crops is already finished. -Okay. Let's talk about the Ukraine wheat production this year. What are the estimates and also how that they compare to a year ago and then give us a feel for Ukraine's wheat exports this year versus a year ago? -Okay. This year, the crop of wheat is about 16.5 million tons. It's about 7 million tons less than previous year. Also, the yield of the wheat goes down for about 0.6 tons per half year. -Uh huh. -That's about maybe 1.5 after this break and mostly it's because of the severe weather conditions. Last year, it was the same period season for wheat as well as there were very low temperatures. There were not many precipitations. Last fall and the spring, there was a very big drought especially in the south and the southeast regions of Ukraine so the-- set which is about 7 million tons less this year than last. -And what about exports? Can you give us a feel for what were exports like last year and what were they expected this year? -Yes. I will try. Last year, export was about 5 million tons of wheat, but that was mainly because the [unk] wheat. And this year, the figure is about 5.5 million tons. So, it's practically the same as the last year. -Of course, Egypt being one of those bigger customers of Ukraine has already said that it will not buy from Ukraine next year. Where will Egypt turn to, to get its million wheat supply then? -Actually, there are some talks-- some Ukrainian expert said that Egypt made such announcements several years ago, 2 or 3 years ago, when Ukraine introduced a ban on expert of wheat, but later the prospects for a new crop in Ukraine were considered as Egypt reconsidered its statement. So, some expert said that this is just nothing serious so maybe next year when the prospects for winter wheat will be good, Egypt will reconsider its decision so this expert thinks that everything will be okay with the export through the Egypt next year. -The last time the Ukraine ban was put in place actually, the Russian grain ban was put in place, Egypt turned towards the U.S. and became the number 1 customer during that year. Last year, Egypt was the U.S. 6th largest customers. So again, for as far as U.S. interests go, any ban in Ukraine and Russia really props up people's ears here in the U.S. so it will be interesting to see where Egypt, the largest wheat importer of the world turns for its million wheat supply going forward. Turning to corn production real quick Yuri, for those just tuning in, Yuri Mikhailov is an agriculture economist for a monthly magazine in Kiev, Ukraine. Yuri, give us a feel for corn production in Ukraine as I understand that it's going up and also it's getting more export business. -Oh well, actually the crop or the production of corn in Ukraine is the same as the last year. Last year, it was 22.3 million tons. This year, it will be about 21 million tons so it's just practically the same and mainly regardless of the droughts in south and southeastern part of Ukraine, because there was a-- with the kill of winter wheat, the producers increased the [unk] for 4 on this year and despite the decrease in yield for corn, practically, it's decreased by 2 tons per hectare. The total crop is the same. -But corn is becoming a major crop in Ukraine, is that correct? -Yes, that's right. Even last year, that was about [unk]. It's a full grain in Ukraine, the corn and this year it's sure even will be better. -Real quick Yuri, what do you hearing about Russia and possible grain export ban there? Will that happen? Do you think this next year or not? -It's very hard to talk about Russia. Things may happen that in more months. They can-- At the moment, they do not see the necessity of introducing the ban, but the situation may change any moment so I cannot say anything about Russia at the moment. -Okay, Yuri, thanks for your time. We appreciate it via Skype. -Okay, my pleasure. -Yuri Mikhailov is an ag economist for a monthly magazine in Kiev, Ukraine and again, it looks like the export ban in Ukraine will actually be implemented towards the start of next month or in December. We'll have to wait and see what happens with their exports and the export of wheat world so to speak in that market and also what happens maybe in the next year with Russia. Well, that's a look at some of the crop problems around the world in Argentina, Brazil and Ukraine and also some potential for some countries to increase their corn exports in the next year. Thanks for tuning in to your world and agriculture. I'm Mike McGinnis for agriculture.com.