Brazil to see 'another big crop planted' for 2017-18, says Bunge

07.08.2017

Brazil is poised for large crop plantings for 2017-18, despite weaker prices, Bunge chief executive Soren Schroder said – giving an upbeat outlook for global rapeseed production too.

There has been some idea that growth in Brazilian sowings of corn and soybeans may slow in 2017-18, thanks to a retreat in prices of both crops, depressed in local terms by strength in the real besides by pressures on international markets.

The International Grains Council last week forecast a 3% drop in Brazil's corn sowings, to 16.8m hectares, citing that "average values are more than 40% lower year on year, pressured by a much more comfortable supply outlook", although seeing area switched to soybean seedings.

"Farmers could be encouraged to shift some full-season corn area to soybeans in less productive regions given prospects for relatively poor returns," the council said, forecasting a 2% rise in Brazil's 2017-18 soy sowings, which start next month.

Barter ratio

However, Mr Schroder flagged that commodity prices were not the only key factor in determining Brazilian farmers' planting intentions, which were also particularly affected too by prices of inputs such as sprays and fertilizers, which many of the growers pay for in crops rather than cash.

"The other thing that's important is that the barter ratio, the ratio of prices between crops and fertilizer and crop protection and so forth," and a ratio that "is actually pretty reasonable", Mr Schroder told investors.

"So when farmers make their planting decisions now in September, they will be looking at a favourable relationship between inputs and crop prices," even if the soybean price is below the $10 a bushel, Chicago basis, that has been encouraging Brazilian sales of late.

"It's a relative value play of inputs to outputs," he said

"And that's why we are convinced that we will see another big crop planted in South America and Brazil and even a small amount of growth, even if the current price isn't so sexy."

Brazilian nutrients group Fertilizantes Heringer will next week give updated estimates for the barter ratio, which as of March stood at 17.3 for soybeans and 53.3 for corn in Parana, per 60 kilogramme bag of crop.

Canola, rapeseed prospects

On rapeseed, and its canola variant, Mr Schroder acknowledged some dryness threat to the Canadian crop from dryness although, following on from decent rains earlier in the season, he added that it was "hard to tell whether we take the yields down a little bit".

However, with Canada's canola sowings at a record 22.8m acres, up 12% year on year and exceeding wheat seedings for the first time, "we have a very large canola crop in the ground.

"It's going to be... likely as large, if not larger, than last year," he said.

Meanwhile in the European Union, the top rapeseed producer, had "a nice rebound" in output in the harvest now completed in many countries.

Strategie Grains earlier this week lifted its forecast for this year's EU rapeseed harvest by 790,000 tonnes to 21.9m tonnes, taking it 1.6m tonnes above the 2016 result.

'Should be favourable'

"So the combined rapeseed, canola crop is up significantly from last year," Mr Schroder said.

For Bunge, the read crop availability "should be favourable" for crushing margins "as we get into… the end of the third quarter and the fourth quarter, for sure".


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