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CNA Bulletin highlights impact on crops and export situation

Posted by Marina
One of the highlights of the weekly newsletter of the Confederation of Agriculture and Livestock of Brazil (CNA) is the announcement of an additional quota of 80 thousand tons, free of tariffs, for the export of sugar to the United States. In the entity's assessment, this volume is negligible and much lower than what was agreed in relation to the importation of US ethanol with exemption from tax.

The entity also warns of the deadline for submitting the Declaration of the Tax on Rural Territorial Property (DITR), which ends on September 30. The orientation is to deliver until next week, under penalty of fine and other penalties.

Data from the WTO and the Chinese government show that, in the first half of 2020, Brazil was the main supplier of agricultural products to China, with a share of 22% of imports from the Asian country, generating revenues of US $ 21 billion. Brazilian agribusiness exports accounted for 51% of total shipments in the period, while in the same period last year this share was 43%.

Demand for Decarbonization Credits (CBios) remains strong, with record purchases by distributors. Last Monday, more than 250,000 CBIOs were purchased.

The publication assessed the behavior of the main crops during the pandemic from 21 to 25 September.

Continues after the form


Rural Territorial Property Tax

As already warned by the CNA, the deadline for submission of the Declaration of the Tax on Rural Territorial Property (DITR) ends on September 30th. Failure to send the declaration generates a fine and some other implications, such as the non-release of the negative debt certificate, the impossibility of adhering to any existing credit line and the impediment of transferring properties. To learn more, visit here.

Vegetables and fruits

The adoption of preventive measures against Covid-19 remains intense in orchards and packing houses to maintain the good pace of fruit harvesting and processing activities. The good conditions of production have ensured an adequate supply of melons, grapes, mangoes and watermelons, which are found at the beginning of the harvest.

Even with the expansion of supply, the heated external demand and the recovery of sales in the country have contributed to sustain prices in the domestic market. In the case of apples, papayas and bananas, prices have been supported by lower production due to seasonality.

For the main vegetables, the week was one of price retraction. In the case of potatoes and onions, the intensification of the harvest in the Cerrado of Minas Gerais and Goiás was the main responsible for the devaluations. In the case of lettuce and carrots, the week was marked by little heated demand.

In relation to the foreign market, until the third week of September, 72 thousand tons of fruit were exported. The average daily volume exported was 5.56 thousand tons, 33% higher than the average for the same period in 2019.

The CNA / Senar System Safe Fairs remain active throughout Brazil. In the last days, five new fairs were held in Bahia, in the municipalities of Santa Bárbara, Itamaraju, Dário Meira, Mairi and Riachão do Jacuípe. Altogether more than two hundred producers participated. This Saturday (26), Brasília will host the second edition of Feira Segura in the drive thru model.

Sucroenergetic

This week, an additional quota of 80 thousand tons, free of tariffs, was announced to export sugar to the United States. In the CNA's assessment, this volume is negligible and much lower than what was agreed in relation to the importation of US ethanol with exemption from tax. Therefore, the CNA supports the continuation of negotiations, which must be linked to the reciprocity of the Americans in the removal of the import tariff for Brazilian sugar by the United States. The objective is to avoid measures that protect producers in other countries to the detriment of Brazilian producers.

In relation to the market, the purchase of Decarbonization Credits (CBios) continues to heat up. The acquisition of distributors between September 16 and 22 broke a record. In a single transaction, registered on the 21st, more than 250 thousand CBios were purchased by distributors. The average unit price was between R $ 23.50 and R $ 32.

Regarding the sugar market, consultants and international banks point out that, after a 1.5% drop in global sugar consumption in 2019/2020, resulting from the coronavirus pandemic, it is estimated an increase of 1.9% in the season 2020/2021. The increase in consumption tends to partially offset the expected increase in sweetener production.

In New York, at Ice Futures, batches for October / 20 ranged from 12.50 to 13.00 cents per pound throughout the week. In the domestic market, the 50 kg bag of crystal sugar, measured by Cepea / Esalq, in São Paulo, remained quoted above R $ 86.00 and sustaining increases throughout the week. Although production has grown this year, the good performance of Brazilian sweetener exports keeps prices steady or rising in the domestic market.

In the case of ethanol, the greater mobility of the population has increased the demand for biofuel. The daily indicator of hydrated ethanol, measured by Esalq / BM & FBovespa, maintained increases throughout the week and closed at R $ 1,898.0 / m³.

Grains

With the end of the sanitary vacuum, the 2020/2021 harvest gains attention from the sector. In Mato Grosso, soybean planting has already started and evolves more intensively in irrigated areas and, still timidly, in rainfed areas in the last week. Good rainfall volumes - between 25 and 50 mm - were recorded in northern Mato Grosso, in Goiás and in southern Mato Grosso do Sul, regions where soybean planting is expected to advance at a faster pace in the coming weeks.

The 1st harvest corn is already delayed planting in Paraná due to the lack of rain. According to the Department of Rural Economy (Deral), 34% of the areas have already been sown by September 22, a 39% delay compared to the same period last year. However, the dry climate that harms the planting of corn has favored the wheat harvest, which already reaches 44% of the area. In the last harvest, this percentage was only 6% until the current week.

In the international market, soybean prices decreased during the week, but remain above US $ 10 / bushel. American export sales support prices at good levels. For the past two weeks, the USDA has reported daily sales of over 100,000 tonnes to China. In the accumulated of the 2020/2021 harvest, the USA has already exported 32.3 million tons, of which 18.2 million tons went to China.

In Paranaguá, the spot soybean price reached a record level of 150 reais / bag on September 24, an increase of 8% in the last 7 days. In the country's main markets, prices are above the export parity. In some places in Paraná and Rio Grande do Sul, prices even exceeded those in ports, reflecting a tight domestic offer in the off-season.

In the case of corn, Brazilian exports are estimated at 6.3 million tons in September. In the accumulated from January to September, the volume of corn shipped totals 20.7 million tons, 7.5 million tons less than in the same period last year. The lower productivity of crops in Paraná and Mato Grosso do Sul and the delayed harvest are the reasons for the reduction.

Corn prices are still remunerative to the producer, reaching R $ 62 / bag in B3, a record value for the November contract. The devaluation of the exchange rate, the high domestic demand for meat and the retention of sale of the last batches of the off-season season boost cereal prices.

Coffee

After a long period of drought, the main producing regions received rain in the last week. However, according to the Procafé Foundation, the rains supplied only 30% of the volume expected for September and were insufficient to reverse the deficit of water storage in the soil. The pluviometric indexes of the next weeks will be decisive for the establishment of the main flowering of Arabica coffee expected for October.

The CNA has discussed measures to deal with the drought that affects the main producing regions of the country, such as improvements in rural insurance and other risk management tools.

Conab released the third survey of the Brazilian coffee crop in 2020, estimated at 61.6 million bags. Despite the good productivity, the estimated volume is 25% higher than the harvest of 2019, but lower than that of 2018 (high bienniality), thus not being set as a record.

In relation to prices, the Cepea / Esalq indicator for arabica type 6 started the week down, but still stands above R $ 530.00 / bag. The Cepea / Esalq indicator for the conilon has remained above R $ 385.00 / bag throughout the week.

Poultry and pigs

The live chicken market in the interior of São Paulo operated in stability compared to last week, with the price paid to the producer remaining at R $ 4.10 / kg. At the wholesale level, according to CEPEA / ESALQ, the price of frozen chicken in the state had variations throughout the week, but closed stable at R $ 5.77 / kg, an increase of 10.3% in the month and 7% in 2020 Price stability is due to the loss of purchasing power of the population that occurs naturally at the end of the month.

In other important regions for independent production, such as Minas Gerais and Pernambuco, the prices paid to the producer are R $ 4.15 and R $ 7.00 / kg, respectively. For the integrated production market, the remuneration of producers remains stable in nominal terms.

In the egg market in the interior of São Paulo, the box with 12 dozen fell slightly this week, quoted at R $ 69.00, R $ 1.00 below the value negotiated in the past. In Minas Gerais, the reference price closed the 23rd at R $ 70.00, also falling from the 16th, when it was quoted at R $ 75.00. The egg has been the cheapest protein in recent months, but the excess supply brings a lot of imbalance and further devaluations are expected.

In the pig industry, the state exchanges closed practically stable compared to last week, influenced by the heat of the last days and the reduction of the purchasing power of the consumer at the end of the month. The only increase reported was in Rio Grande do Sul, which expects to trade the animals next week at R $ 7.35 / kg (+ 1.4%).

CEPEA data show that the exchange ratio for pork / corn or pork / soybean meal remains high in the interior of São Paulo, with the decrease in supply of inputs and pressure from the dollar on prices.

Dairy

In retail, UHT milk prices fell by 2.37% over the week, trading at R $ 3.49 / l. Mozzarella cheese prices remained stable throughout the week and at high levels, at R $ 29.38 / kg.

Imports of dairy products continue to record growth in September, with volumes higher than the month of August.

Fat ox

The beef cattle market still lacks animals for slaughter and spacing in the scales of slaughterhouses. The big news is the reduction of the base differential between the states and São Paulo. This value is usually negative, as prices in other states are lower than the state of São Paulo. But now the differentials are narrowing and, even, they are getting positive, that is, higher prices in states like Minas Gerais and Pará.

Brazilian exports continue to accelerate, with the possibility of once again breaking the record for shipments and sales.

As for Covid, what worries the sector is the end of emergency aid, which has been supporting domestic consumption. When withdrawing the aid, the purchasing power of the lower income population will be reduced, and the impact generated by the sale of meat at retail will reflect on the prices of live animals delivered for slaughter. Even in a year of low consumption in Brazil, the domestic market continues to represent 67.5% of the consumption of meat produced in supervised slaughterhouses.

Fish

The price of tilapia at CEAGESP in São Paulo decreased compared to last week (-8%), quoted at R $ 7.50. This is due to the fluctuation of volumes contracted by wholesale and retail weekly and at the end of the month, when household income availability falls. There is no oversupply or drop in demand to worry producers.

During the pandemic, families increased their consumption of tilapia as a way to diversify the menu. In addition, with the return of social activities, it is noted that tilapia conquered a larger audience, which contributes to a possible increase in per capita consumption in the accumulated of 2020.

In the foreign market, the favorable exchange rate has made Brazilian tilapia more competitive. Brazilian fish exports total 31 thousand tons in the accumulated result for this year up to August, an increase of 8.8% compared to the same period last year.

International scene

European Union

- The European Association of Rural Cooperatives, Copa-Cogeca, published an analysis on the impact of the Covid-19 pandemic on the agriculture, forestry and fisheries sectors in the EU. According to the document, despite the partial reopening of some economic activities in the EU, the market situation in most agricultural sectors would not have improved substantially and would remain fragile. With regard to seasonal work in crops, the document criticizes the “uncoordinated” establishment of quarantine criteria among EU member states, which makes the movement of workers more difficult. Regarding specific sectors, the document highlights:

• Dairy, meat, veal and sheep: although the situation has stabilized to some extent, the sector is still concerned about future impacts from a second wave of Covid-19, potential restrictions resulting from the economic recession, the future trade relationship between the EU - United Kingdom and the impact of oil prices on price sensitive markets;

• Cereals, oilseeds and protein crops: the prices of sunflower grains with a high oil content would have fallen 30% in southern Europe in the interannual comparison, as a result of the lower demand for frying fat. In addition, cereal prices (wheat, durum wheat, barley and rye) would be low in most EU regions;

• Honey: the flowering season in southern and eastern Europe would have been marked by exceptionally rainy and cold conditions, which would have stopped the production of honey completely. In the more industrialized regions, beekeeping would be facing one of the worst years on record (Agribusiness Promotion Division-II (DPA-II) - MRE).

- The European Commission opened a public consultation on the proposal for an implementing regulation on the administration of import quotas that comply with the “first come, first served” principle. According to the proposal presented, the implementing regulation aims to promote greater “simplification and transparency” in the management of agricultural quotas by establishing common rules for their administration. Specific sectoral rules are established for cereals, rice, fruits and vegetables (including processed), wines, meats (cattle, goats, pigs and sheep) and dairy products (Division of Agribusiness Promotion-II (DPA-II) - MRE).

- The Federal Agency for the Safety of the Belgian Food Chain (Afsca) ordered, on September 18, the destruction of part of the country's pear production after finding that about 150 producers had used a Spanish organic fertilizer containing matrine , a pesticide banned in Europe (Agribusiness Promotion Division-II (DPA-II) - MRE).

China

- The General Administration of Customs of China (GACC) announced on September 18 that a nucleic acid test was positive for SARS-CoV-2 on the packaging of frozen fish from an Indonesian establishment. The acceptance of international health certificates from the establishment in question was suspended for a week (Agribusiness Promotion Division-II (DPA-II) - MRE);

- According to the classification of the WTO Agreement on Agriculture and based on data from Chinese Customs, in the first half of 2020, agricultural products represent 8.6% (US $ 95 billion) of total imports from China (US $ 1 , 1 trillion). Of the total of Chinese agricultural imports in that period, 22% were supplied by Brazil (US $ 21 billion), placing the country in the position of main supplier of agricultural products to China. In the list of Brazilian exports to the Chinese market, in turn, agricultural products represent 51% of sales, with an increase in participation in relation to the same period in 2019, when it was 43%. It is observed, however, that only soy represents approximately 70% of Brazilian agribusiness exports to China. Excluding this product, Brazil's share of China's agricultural imports would be equivalent to 7%. Brazilian participation in agricultural imports from China went from 19.7% in the first half of 2019 to 22% in the same period in 2020. This increase can be attributed both to specific domestic factors and to the international context. On the one hand, the swine fever epidemic in the country has increased demand and prices for animal proteins, whose representativeness in bilateral trade has increased significantly. On the other hand, the Chinese-American “trade war” generated a diversion of trade from Brazil towards the Chinese market, especially soybean (Division of Promotion of Agribusiness-II (DPA-II) - MRE).

Ecuador

- The crisis caused by Covid-19 forced the Ecuadorian government to adopt strict quarantine measures to control contagion. The adoption of similar measures by most countries, such as the USA and European countries, the main markets for Ecuadorian flowers, resulted in the cancellation of 80% of imports. The president of Expoflores, Alejandro Martínez, said that the situation in the sector is critical and the worst ever faced by Ecuadorian floriculture. According to the president, between March and June 2020, the sector's losses reached US $ 130 million, with 10,000 direct employees and 6,000 indirect employees (Agribusiness Promotion Division-II (DPA-II) - MRE).

WTO

- A new phase of discussions on agriculture will start at the WTO this September. WTO members will discuss within the Agriculture Committee the impact of Covd-19 on the agricultural sector and exchange information on its policies. Gathered in an extraordinary session, they will seek to advance in the negotiations on the sector, with a view to achieving a successful outcome until the 12th Ministerial Conference scheduled for 2021 (WTO, 16 September);

- During an event organized by the Food and Agriculture Organization of the United Nations (FAO), WTO Deputy Director-General Alan Wolff explained that more open international trade and continued reforms in agricultural trade policy will be essential to address the global food security needs in the next decade. In his comments, Wolff emphasized the role of trade as a transmission mechanism for transporting food from where it is abundant to where it is scarce, in addition to the importance of trade policy - and the WTO rule structure - as a means of creating predictable market conditions and competitive for farmers (WTO, 23 September 2020);

- At a meeting of the Regional Trade Agreements Committee (RTAs) on September 22, WTO members reviewed the trade in services aspect of the Comprehensive and Enhanced Partnership Agreement between the European Union and Armenia and the Free Trade Agreement between Mercosur and Israel. The EU - Armenia Agreement provisionally entered into force on 1 June 2018 and contains commitments on market access in the services sector, in addition to commitments under the General WTO Agreement on Trade in Services (GATS). The EU and Armenia have also agreed to obligations on government procurement, intellectual property, competition, the environment and labor, e-commerce and small and medium-sized enterprises. The Free Trade Agreement between Mercosur and Israel was fully implemented on January 1, 2020. Israel liberalized more than 90% of its tariff lines for imports from Mercosur, which in turn liberalized more than 95% of its lines for Israeli products . Israel (who also spoke on behalf of Mercosur) said that the agreement aims to eliminate barriers to trade, facilitate the circulation of goods, promote conditions of fair competition in the area of ​​free trade, increase investment opportunities and increase cooperation in areas of interest. mutual (WTO, 23 September);

- According to the WTO, world trade in goods fell 14% in volume and 21% in value in the second quarter of 2020 compared to the previous period, due to Covid-19's containment measures. In the most recent data, the sharpest declines were recorded in Europe (-21%) and North America (-20%), while Asia was relatively less affected (-7%) (WTO, 23 September 2020) .

Source: DATAGRO

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