Red Sea crisis creates trade woes for Australia
Australia's agriculture industry is facing challenging trading conditions as the escalating conflict in the Red Sea heightens the risk of shipping through the region.
The conflict has increased the risk of shipping through the Red Sea and particularly through the Suez Canal, one of the world's most important maritime channels connecting Asia-Pacific with Europe and the Middle East. The US and UK launched a new round of strikes on Houthi-controlled areas of Yemen on 22 January in response to the militants' attacks in the Red Sea.
Australian live cattle and sheep exports into the Middle East and surrounding countries for 2023 totalled 379,454 head out of a total of 1.28mn, according to data from Department Agriculture Fisheries and Forestry (DAFF). An Australian live cattle and sheep vessel bound for the Middle East was told to return to Australia on 20 January with health and welfare concerns for staff and animals, according to DAFF.
Australian beef exported to the Middle East in 2023 totalled 28,977t and 2,406t to the UK, according to DAFF data.
Australian beef exporters have been struggling to secure container and shipping space to export to the Middle East and European countries, with ships changing schedules and routes regularly because of the increased risk factors.
Many shipping companies have opted out of using the Suez Canal to take the lower risk longer route around South Africa and up through the Atlantic Ocean to avoid any potential conflict zones in the Red Sea. Rerouting shipments around the Cape of Good Hope adds around 10 days to the duration of the trip depending on the vessel type and speed, according to ING Bank Commodities Strategists.
Australian canola exports may be particularly affected, as the bulk of these are destined for the EU and normally shipped through the Suez Canal, according to RaboResearch general manager Stefan Vogel.
The canal issues might help Australian wheat and barley shipments to be slightly more competitive into destination markets in Asia-Pacific, the Middle East and east Africa because key competitors from Russia, Ukraine, the EU and even the east coast of the US will struggle to get to these destinations as they usually pass through the Suez Canal, Vogel said.
But imported goods into Australia will have to bear higher freight costs, although container freight is unlikely to get as expensive as in 2021, Vogel said. Increased voyage times will increase shipping costs for exporters along with the cost of goods, parts and machinery coming into Australia.
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Floods delay, damage Brazil’s Rio Grande do Sul crops
Floods delay, damage Brazil’s Rio Grande do Sul crops
Sao Paulo, 10 May (Argus) — The unprecedented floods that have hit Brazil's Rio Grande do Sul starting on 29 April challenged the state's harvest progress and caused concerns related to crops conditions. The state leads Brazil's rice and summer corn production and is expected to be the second-largest soybean producer in the 2023-24 crop. Harvesting works for oilseed, corn and rice were approaching their final stretches when rainfall intensified. Rains have halted and in some cases completely paralyze d activities, while also ruining some crops. Soybeans Rio Grande do Sul's 2023-24 soybean crop is estimated at 22.2mn metric tonnes (t) by regional rural agency Emater-RS, while national supply company Conab expects 21.9mn t. Both forecasts would be a record for the state, which would become the season's second-largest oilseed producer. Rio Grande do Sul would account for approximately 15pc of Brazil's soybean production. The 2023-24 crop was 78pc harvested as of 9 May, advancing by 2 percentage points from a week prior, according to Emater-RS. Activities were suspended in almost the entire state since the rainfall period began, with few exceptions. Farmers managed to advance works in the northwest and in the southern region known as Campanha — bordering Argentina and Uruguay — on 29-30 April, but reported problems because of the high moisture levels. Works in Campanha have resumed since 3 May. Rio Grande do Sul's soybean harvest had maintained a weekly progress of at least 10 percentage points throughout April, while yields remained within a range of peaks of 5,400 kg/hectare (ha) in areas considered to produce excellent results and an average of approximately 3,000 kg/ha. But the remaining 24pc of areas that had yet to be harvested when the flood began is set to register heavy losses, Emater-RS estimates. Storage units were also damaged, which may lead to cuts in a portion of production already counted as safe. Farmers say that grain quality in the latest harvested areas is unsuitable and they have given up harvesting other remaining crops, as that has become economically unfeasible. The high humidity levels of these soybeans reduce their profitability considerably, hardly covering their production costs. For the remaining 22pc still on fields, Emater-RS projects losses of 20-100pc. The agency has yet to officially revise downwards its 3,329 kg/ha yield estimate, but expects its outlook to decrease. Rice Rio Grande do Sul is Brazil's largest rice producer and should account for over 70pc of the national output this season, according to Conab data. The progress of rice harvesting was severely compromised by the heavy rainfall, with Conab estimating that works remain halted at 83pc since 28 April. The location of remaining areas is another factor weighing on the delay. Rice is sowed in floodplains, which are difficult to access and now coincide with major flooding points in the state. Crops in the Bage region — where activities were the most advanced — report losses of up to 30pc in some areas, but further damages are possible because of another flood forecast caused by the Uruguay River's elevated levels. Farmers also report problems related to the process of drying the grains — resulting in further quality and yield losses — caused by power outages and road blockages that hamper transportation to storage facilities. The 2023-24 rice crop in Rio Grande do Sul was initially set to yield over 8,300 kg/ha and produce almost 7.5mn t, according to Emater-RS and Conab. But the local agency now expects to revise these figures down. Summer corn Emater-RS expects the state to produce 5.2mn t in its 2023-24 first corn crop, 100,000t below Conab's estimate. Rio Grande do Sul is Brazil's top summer corn producer, with 20pc of the national production. The 2023-24 first corn crop harvest advanced by 3 percentage point to 86pc of Rio Grande do Sul's planted area in the week ended 9 May. Producers have so far prioritized advancing works and observing the damage for soybeans, which is the state's main crop. Damages in most summer corn areas have yet to be accounted for, but farmers are reporting losses of up to 100pc in crops in the northern regions of Lajeado and Caxias do Sul. The remaining areas in Santa Maria city — where harvest is 72pc complete — are also expected to register losses close to 100pc. Looking ahead Brazil's national meteorological institute Inmet expects more heavy rainfalls in Rio Grande do Sul this weekend, with volumes may surpassing 100mm (4 inches) on 10-12 May. The state's center-north and west will be the most affected areas, alongside the northern coastal areas and the south portion of neighboring Santa Catarina state. The rains and floods in the state have left at least 113 dead, 146 people missing and more than 165,000 people displaced, according to the civil defense. By Nathalia Giannetti Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil launches R51bn program to help flood victims
Brazil launches R51bn program to help flood victims
Sao Paulo, 10 May (Argus) — Brazil launched a R50.9bn ($9.9bn), multi-step program to help victims of the historic floods that have hit southern Rio Grande do Sul state since late April. The measures seek to aid workers, social program beneficiaries, companies, rural producers and individual cities. Some of them include the early payment of salaries and social welfare, priority in tax refunds and two additional installments of unemployment insurance, among other actions. The government will also set aside R200mn to help public banks finance proposals to reconstruct Rio Grande do Sul's infrastructure. The program will help over 3.5mn people, the government said. Earlier this week the federal government also launched a decree to ease relief spending to Rio Grande do Sul . The rains and floods in the state have left at least 113 dead, 146 people missing and more than 165,000 people displaced, according to the civil defense. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil's Bndes backs Rio Grande do Sul flood victims
Brazil's Bndes backs Rio Grande do Sul flood victims
Sao Paulo, 9 May (Argus) — Brazil's Bndes development bank will suspend the debts of companies and farmer hurt by recent flooding in Rio Grande do Sul state for a year and provide R5bn ($970mn) in credits to micro-, small- and medium-sized firms and small businesses. The measure is part of Bndes' emergency program of credit access and will be on effect later this month, it said. The credit is included in the R50.9bn aid package announced by the Brazilian federal government on 9 May targeting farmers, workers and families enrolled in social programs in the southern state. The suspension of debts, including payments on interest and principal, will benefit small business owners and farmers hit by the heavy rainfall and floods that have hammered Rio Grande do Sul state since 29 April. The arrangement will total principal and interest payments of R6.1bn in 2024 and of R1.6bn next year. Bndes may also contribute with other projects to help the state. That may include construction of schools, hospitals, bridges and roads and urban development, the bank's head of planning and infrastructure Nelson Barbosa said. At least 428 cities have been hit by the floods. So far, there are 107 confirmed deaths and 136 people missing, according to the state's last emergency service report. Around 1.5mn people have been affected by the tragedy. By Maria Albuquerque Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil's 3tentos cuts soy crop outlook amid floods
Brazil's 3tentos cuts soy crop outlook amid floods
Sao Paulo, 9 May (Argus) — Brazilian agribusiness company 3tentos cut its soybean crop outlook for this season because of the floods ravaging southern Rio Grande do Sul state. An important part of 3tentos' operations is headquartered in Rio Grande do Sul, the second-largest soybean producer in the country, which has been facing heavy rainfall since 29 April that has killed 107 people, according to the state's civil defense. As a result, Rio Grande do Su's soybean crop may drop to 20mn-21mn metric tonnes (t) from 23mn-24mn t previously predicted, according to 3tentos' chief executive Luis Osorio Dumoncel. At least 80pc of soybeans harvested this year are stored in warehouses or ports. "We have been working tirelessly to maintain all operations in the supply of inputs, grains, feed and biofuels," he said during a quarterly earnings call. The company sees a "tiny risk" to its supply chains of pesticides, seeds and fertilizers because of the floods. On the logistics side, alternative export routes have also been used to ship products such as soybean meal, chief operating officer Joao Marcelo Dumoncel said. 1Q results 3tentos' first quarter sales reached R2.68bn ($520mn), a 48.5pc hike from the same period a year earlier, driven by the industry, biodiesel and soybean meal segments. The industry segment, the firm's largest, accounted for R1.52bn in sales, rising by 69pc year-over-year. Soybean meal and other products' revenues totaled R927.6mn, 72pc higher than in the first quarter in 2023. Biodiesel sales increased by 64pc to R591mn, thanks to the increase in biofuel blending mandate to 14pc from 12pc since March. "We are confident that the biodiesel operation will help the company's margin this year," Dumoncel said. The firm's soybean crushing margins rose by 3.3pc in the quarter, settling at R442/t, driven by biodiesel production. 3tentos' grain sales grew by almost 27pc to R560mn. Revenues in the agriculture feedstocks segment — such as fertilizers, pesticides and seeds — reached R601mn in the first quarter, up by 35pc from a year prior. The company's first quarter income totaled R156.44mn, a 51pc increase from the same period last year. 3tentos also started to build its first corn crushing unit to produce ethanol and dried distillers' grain (DDG). The company completed the issuance of debt securities worth R560.73mn this week. By Alexandre Melo Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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