Soy market outlook in Mercosur | 2012/13

i by Anderson Galvão
Major trends of the oilseeds and vegetable oils
markets in South America Istanbul, Turkey
October, 2012
Brazil as the cradle of price formation in 2012

Copyright © Céleres® 2011. Todos os direitos reservados. Toda a informação contida neste documento é de propriedade intelectual da © Céleres--Your Agribusiness Intelligence.
© Céleres 2011. Todos os direitos reservados. Toda a informação contida neste documento é de propriedade intelectual da Céleres® Your Agribusiness Intelligence.

Oilseeds in Mercosul
Soybean is the most relevant and will increase its importance

Key oilseeds production in 2012/13 Key vegetable oils production in 2012/13

Soybean Rapeseed Sunflowerseed Soybean Rapeseed Sunflower
Other Production Other Production
500 200 180 20
453,1
34.6% of world
production 17,8
450 180 160 154,3 18

157,0
400 98,8 160 1,7 16
140

350 140 14
34,8 120
75,1
300 120 12
61,3
100
250 100 10
80
200 80 13,1 8
148,3 15,3
60
150 60 23,8 6
258,1
40
100 40 4

20 42,3
50 20 2

0 0 0 0
World Mercosul World Mercosul

Source: USDA/SAGPyA/CÉLERES® | Elaboration: CÉLERES® | Values in million metric tons Sep/12

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World oilseeds market will became even more dependent on
Mercosul humors, trends and risks of its soybean production

Soybean world production
300
261,0 264,3 260,5
245,1
250 236,0
215,8 220,7 219,5
211,6

200
91,4 90,6 73,3 Others
150 87,0 72,9 83,2 USA
85,0 83,5 80,7
Mercosul

100 World

132,0 135,6 144,4
50 101,8 113,4 113,8 114,0
98,0 96,6

0
04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13

55.4% of world 60% of world
soybean production soybean output in 5
in 2012/13 years?


Biotechnology became the technological standard among local
farmers

Biotech adoption rates in Mercosul countries | Soybean
100%

90%

80%

70%
07/08
60% 08/09
50% 09/10
10/11
40%
11/12
30%
12/13 p
20%

10%

0%
Brazil Argentina Paraguay Uruguay Bolívia

Biotech soybean But there are local
became the standard suppliers of non GM
in Mercosul product
Source: CÉLERES® | Elaboration: CÉLERES® | Values in % of total soybean acreage in each crop season Sep/12


With regular weather condition, Brazilian growers could
plant almost 28 million hectares

Brazilian soybean supply and demand balance

12/13
03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12
-1s Avg. +1s

Area (million ha) 21,3 23,5 22,3 20,7 21,3 21,5 23,3 24,1 25,1 26,5 27,1 27,5

Yield (t/ha) 2,4 2,3 2,5 2,8 2,8 2,7 2,9 3,1 2,6 3,0 3,0 3,0

Beg. stock 2,9 2,8 1,2 1,0 2,3 2,9 0,5 2,3 4,8 2,3 2,3 2,3

Production 51,2 53,1 54,9 57,8 59,7 58,2 68,5 74,9 66,3 80,6 82,5 83,6

Imports 0,3 0,4 0,0 0,1 0,1 0,1 0,1 0,1 1,0 0,1 0,1 0,1

Supply, total 54,4 56,3 56,2 58,9 62,1 61,2 69,1 77,3 72,1 83,0 84,9 86,1

Crushing 29,3 29,9 27,5 30,1 31,8 29,3 34,5 36,3 34,8 33,8 36,0 37,0

Other uses 3,0 2,8 2,7 2,8 2,8 2,8 3,2 3,3 3,4 3,1 3,2 3,3

Dom. use 32,3 32,7 30,2 32,9 34,6 32,1 37,7 39,6 38,2 36,9 39,2 40,3

Exports 19,2 22,4 25,0 23,7 24,5 28,6 29,1 33,0 31,6 36,0 38,0 39,0

Demand, total 51,5 55,1 55,2 56,6 59,1 60,7 66,8 72,6 69,8 72,9 77,2 79,3

End stocks 2,8 1,2 1,0 2,3 2,9 0,5 2,3 4,8 2,3 10,1 7,7 6,8

Stock/Demand 5,5% 2,2% 1,8% 4,0% 5,0% 0,8% 3,5% 6,6% 3,3% 13,9% 10,0% 8,5%
Source: CÉLERES®/ABIOVE/SECEX | Elaboration and projections: CÉLERES®


But a huge increase in planted area will not, necessarily,
means a huge increase on the final soybean output

Soybean yield in Brazil and the influence of new areas expansion

Old areas/total area Soybean yield
100,0% 3,2
Share of old areas ver total soybean planted area

90,0% 3,0

Brazilian soybean yield (t/ha)
80,0% 2,8

70,0% 2,6

60,0% 2,4

50,0% 2,2

40,0% 2,0
90/91 96/97 01/02 06/07 11/12

Source:CÉLERES® based on own data and CONAB. | Note: Old areas (> 5 years with agriculture), calculated since the annual growth in the planted area since 1976/77 crop season


Operational margin for soybean production in Brazil
Even in the far west regions profits is going to be one of the
highest in the recent years
Profitability with soybean production in Brazil | Mato Grosso state
Values in US$ per hectare
Dct costs Margin Revenue

R$ 2.205,4 R$ 2.260,0
R$ 2.021,2 R$ 1.965,2

R$ 1.617,0 R$ 1.613,7
R$ 1.551,8

R$ 1.594,0
R$ 1.457,3 R$ 1.388,5 R$ 1.356,3 R$ 1.403,8
R$ 1.217,7 R$ 1.238,8

06/07 07/08 08/09 09/10 10/11 11/12 12/13 f

Gross margin in US$ per hectare
$486,7
$429,1
$312,8
$206,0 $213,8
$171,0
$88,7

06/07 07/08 08/09 09/10 10/11 11/12 12/13 f
Source: CÉLERES® | Elaboration: CÉLERES® | Note: references values for Mato Grosso state


Logistic flow in Brazil
Soybean production is a key driver for logistics flow growth

Current 2023

Source: APROSOJA Elaboration: CÉLERES®


Logistic flow in Brazil
Infrastructure is the main bottleneck for a smooth growth in the
coming years
Brazilian main agricultural bulk exports, in million metric tones
160,0
Million metric tones

143,3
140,0
114,5
120,0

100,0 Sugar, raw
84,5
Sugar, refined
80,0 66,5 Corn
60,0 Soy, meal
44,6
Soy, beans
40,0
20,6 Total
20,0

0,0
1996 2002 2007 2011 2012 2015 2021
Projeção

A 34% increase in the volume only in the There are almost 70 million tons expected

last four years, but with almost the same increase for the next ten year and the

infrastructure infrastructure urges for improvement

Source: SECEX/CÉLERES | Projections and elaboration: CÉLERES®


Argentina has facing an unstable production trend due to
weather problems and exhaustion of current technologies

Soybean production in Argentina

Harvested area (million ha) Production (million t)
60,0

50,0

40,0
39,9
30,0
31,9
20,0

10,0

0,0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Yield (actual) Yield (trend)
3,5

3,0

2,5

2,0
Source: SAGPyA/ECEX/CÉLERES | Projections and elaboration: CÉLERES®


If realized, soybean out growth in Mercosul will off set the
loses seem in the USA crop season

Main figures for 2012/13 crop season

168.0 million t 86.3 million t 55.8 million t

83,31

72,27

41,47 39,85
35,00

13,50
8,13
5,40
2,32 1,93 2,63 2,28 1,86
0,04 0,04
Paraguay

Uruguay

Paraguay

Uruguay

Paraguay

Uruguay
Argentina

Argentina

Argentina
Brazil

Brazil

Brazil
Bolivia

Bolivia

Bolivia
Supply, total Domestic consumption Exports


If realized, soybean out growth in Mercosul will off set the
loses seem in the USA crop season

Main changes from 2011/12 crop season

+27.5 million t +7.3 million t +12.1 million t

13,90

9,50

7,00
5,70

3,69 3,77

2,05 2,30
1,30 1,11 1,00 1,01
0,11 0,30 0,30
Paraguay

Uruguay

Paraguay

Uruguay

Paraguay

Uruguay
Argentina

Argentina

Argentina
Brazil

Brazil

Brazil
Bolivia

Bolivia

Bolivia
Supply, total Domestic consumption Exports


Final remarks

• Under regular weather conditions, Mercosul countries can off set the smaller
soybean output in the USA in 2012/13

• Specially from Brazil, it is very unlikely to achieve good yields this crop
season as local growers are expanding over virgin land with low fertility

• Increasing soybean production in Brazil will also result in more exportable
supplies for winter corn (yet a bigger acreage than in the summer)

• Brazil is, currently, a net importer of sunflower oil

• Soybean production will be responsible for the key increase in the local oilseeds
and vegetable oils production

• The bulk of further growth will come from Brazil – through acreage
expansion – as Argentina is reaching it’s maximum planting capacity (without
competition with other crops)

Source: CÉLERES®


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Soy market outlook in Mercosur | 2012/13

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