Argentina is returning to the world markets Leandro Pierbattisti, BA September 25th
Federation of Country Elevators: some figures The Federation is a second level organization, in charge of carrying out all the necessary actions to protects the country elevators interests and promote the country s agricultural development It is composed of 18 member Associations, representing the almost 1000 country elevators around the country A country elevator is an economic group established in the areas where grains are produced and whose main activities are: To provide the commercial system with the capacity to store grains available inland To organize and supply the necessary means for transporting the grains in a speedy manner To give its costumers the most modern commercialization tools which guarantee its income and prevent the risk coming from volatile markets Finally, country elevators collect more than half of Argentinean grain production
So Argentina is returning to the world markets Bad news? Or opportunities for competitors?
Where Argentina, and South-America globally, is located? It s the hemisphere, stupid Two-thirds of the land 90% of the world population One-third of the land 10% of the global population
World corn production in MY 2016/17: 1 071 KMT 85% 15% Source: USDA September 17 forecast
World corn trade in MY 2016/17: 165 MMT 60% 40% Source: USDA September 17 forecast
World barley production in MY 2015/16: 150 MMT 3% Source: USDA September 17 forecast
World barley trade in MY 2015/16: 28 MMT 11% Source: USDA September 17 forecast
World Soybean production in MY 16/17: 351 MMT 18% Source: USDA March 17 forecast
World Soybean meal trade in MY 16/17: 65 MMT 48% Source: USDA March 17 forecast
Keep up in mind 1 Small crops do not necessarily mean fewer exports from South-America 2 Especially in Argentina where higher grain availabilities represent stronger grain exports because of the weak domestic market 100% 80% CORN % Share of domestic market/production 72% 84% 100% 80% SOYBEAN % Share of croushing/production 73% 100% 80% SOYBEAN MEAL % Share of domestic market/production 84% 100% 80% SOYBEAN OIL % Share of domestic market/production 90% 80% 60% 40% 30% 60% 40% 41% 47% 60% 40% 52% 60% 40% 33% 20% 20% 20% 9% 20% 0% Argentina Brazil US 0% Argentina Brazil US 0% Argentina Brazil US 0% Argentina Brazil US Source: USDA
The new Argentine president ended all trade commercial restrictions after taking office So, What has been the impact on local market? And what lies ahead?
The same book, with different pages 2002/03 2010/11 2010/11 2015/16 2015/16 2016/17 Land area * 27 M ha Production * 70 MMT Exports * 50 MMT Growth period stagnant period Growth period recover 33 M ha 105 MMT 76 MMT Arg peso tumbled in 2002 by 300% faced to the greenback FOB grain prices on average: 02/03 = 177 vs. 10/11 = 430 USD But Export taxes coming back in February 2002 Wheat = 10% Corn = 10% Soybeans complex = 13,5% Sunflower = 13.5% * Grains & Oilseeds Land area * 33 M ha 34 M ha Grain crops * 105 MMT 111 MMT Exports * 76 MMT 82 MMT Export taxes in march 2008 Wheat = 28% Corn = 33% Soybeans complex = 45% Sunflower = 41% Export quotas were formalized in April 2008 Prices go down: FOB grain prices MY 15/16 = 317 USD/MT Land area * 34 M ha Grain crops * 111 MMT Exports * 82 MMT 36 M ha 130 MMT 95 MMT Scrapped taxes on cereals and sunflower, decreased on Soy Complex Lifting of export quotas Floating exchange rate since December 2015 Source: according to Buenos Aires Grain Exchange & Ministry of Agriculture and Industry
Commercial restriction lifting has been boosting Argentinean grain exports Bad news or opportunities for competitors?
Wheat market: Argentinean wheat doesn t compete directly with the Black Sea because of different market timing Monthly US wheat exports in KMT Monthly US wheat exports in KMT 5 000 5 000 4 000 4 000 3 000 3 000 2 000 2 000 1 000 1 000 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2006/07 2007/08 2008/09 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 Average MY 06/07-10/11 Average MY11/12-16/17 2012/13 2013/14 2014/15 2015/16 Average MY 06/07-10/11 Average MY11/12-16/17 5 000 Monthly Argentina wheat exports in KMT 4 000 3 000 2 000 1 000 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Source: USDA, IKAR, INDEC 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 Average period 2016/17
Thank you for your attention Leandro Pierbattisti Federation of Country Elevators Associations Avenida Corrientes 123 (1043) Capital Federal, Buenos Aires, Argentina Phone : +54 114 312 0155 lpierbattisti@acopiadores.com