News and notes from South America

Changing weather patterns

Farmers in the South American country of Argentina have struggled through severe drought in recent years thanks to multiple years of La Niña. Mark Brusberg, USDA chief meteorologist, recently spoke at the United States Department of Agriculture’s Ag Outlook Forum. He said the pattern may finally be changing for Argentina.

“The good news for some of these producers is we are now forecast to go into an El Niño. What does that mean? They look forward to this circulation pattern,” Brusberg said. “Now this is completely the opposite of what you would expect to normally happen. You’ve got reverse flow all over the place, but interestingly enough, the impacts really are the opposite of what you get during a La Niña. And in the case of Argentina, you would expect wetter than normal conditions.”

Brusberg said this is reason for some optimism ahead in Argentina for improving yields. 

“What we’ve seen in past years in Argentina is that the years after La Niñas they tend to rebound. Some years they’ve had record yields after several poor yields,” he said. “If I were a farmer in Argentina, I would be optimistic. I would think that I wouldn’t see another year of drought again this year.” 

Export share

U.S. farmers are keeping a close eye on what’s happening down in Argentina and South America in general with growing competition for grain and livestock market share only expected to get more intense in future years. The U.S. export share of world grain exports has been steadily, and dramatically shrinking. The U.S. wheat share of world exports in 2007 was 29%, dropping all the way to 10% in 2022. U.S. soybean exports in 2007 were 40% of world exports, declining to 32% in 2022. U.S. corn exports in 2007 were 62% of world exports, with the steepest decline of the 3 major grains, accounting for just 28% in 2022, according to Doug Tenney with Leist Mercantile. A large percentage of the change in world exports is coming from South American countries, but also countries like Ukraine.

According to USDA, Brazil 2022/23 corn exports (Oct-Sep) are forecast to equal those of the United States at 51 million tons on expanding production and strong exports in the second half of its 2021/22 marketing year (Mar 2022-Feb 2023). Brazil corn exports have exceeded those of the United States only one other time, in the drought year of 2012/13. Since October 2022, Brazil has exported about 25 million tons of corn, far exceeding the same period in any prior year. In contrast, U.S. corn exports have been off to a slow start. Production in 2022/23 was smaller than initially forecast and logistical concerns on the Mississippi River in the months after harvest kept U.S. prices elevated and volumes low, especially as U.S. corn competed with competitively priced supplies from other exporters.

Planting behind schedule

According to Jon Scheve, Superior Feed Ingredients, LLC, the market continues to watch the Mato Grosso region’s planting pace in Brazil, where nearly 50% of their second corn crop is grown. Heading into March, estimates indicated planting pace was slightly behind the 5-year average. If the pace falls further behind in March, yields might be reduced in the future because the timing of corn reproduction will be pushed back to their drier period in late May.

BSE discovery

In late February, Brazil reported another atypical case of bovine spongiform encephalopathy (BSE) to the World Animal Organization for Animal Health (WOAH). That report indicated 35 days elapsed between when the case was first identified on Jan. 18, 2023, and the date it was confirmed on Feb. 22, 2023. 

The National Cattlemen’s Beef Association said this represents an unacceptable delay that is in clear violation of WOAH reporting requirements. It is clear that Brazil is incapable of prompt testing and the reporting requirements that all nations must follow when engaging in international beef trade. Because of a repeated pattern of delayed reporting, the NCBA is calling on Secretary of Agriculture Tom Vilsack to take immediate action to indefinitely suspend beef imports from Brazil until it has made systemic reforms and takes necessary steps to restore confidence in the nation’s ability to participate in the global beef supply.
“We have seen Brazil repeatedly fail to meet the 24-hour requirement for reporting of animal diseases listed by WOAH. In order to protect the safety and security of the U.S. herd, and American cattle producers, we demand USDA take immediate steps to block further beef imports from Brazil,” said Todd Wilkinson, NCBA president and South Dakota cattleman. “Furthermore, we expect USDA to keep the border closed to Brazil until they can demonstrate that they are willing and able to play by the trade rules that govern all other nations. If they can’t play by the rules, they don’t deserve access. Secretary Vilsack needs to act now, rather than kicking the can down the road.”
NCBA sent a letter to USDA in February demanding immediate action on this issue. NCBA is also supportive of bipartisan Senate legislation to suspend Brazilian beef imports pending a review of Brazil’s standards.
“For too long, American cattlemen and women have honored the laws governing international trade, promoting fair and equitable standards, only to have nations like Brazil ignore those same standards.  Brazil cannot be allowed to benefit from the investments we have made to build a massive demand for beef around the globe,” Wilkinson said. “If trade partners like Brazil fail to follow the rules, there must be consequences, they must be painful and immediate.”