One of the highlights of the weekly bulletin from the Brazilian Confederation of Agriculture and Livestock (CNA) is the announcement of an additional quota of 80 thousand tons, free of tariffs, for sugar exports to the United States. In the entity's assessment, this volume is negligible and much lower than what was agreed in relation to the import of North American ethanol with tax exemption.
The entity also warns of the deadline for submitting the Rural Land Property Tax Declaration (DITR), which ends on September 30th. The guideline is to deliver by next week, under penalty of fines 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 the Asian country's imports, generating revenue of US$ 21 billion. Brazilian agricultural 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) continues to be strong, with record purchases by distributors. Last Monday, more than 250 thousand CBIOs were purchased.
The publication evaluated the behavior of the main crops during the pandemic from September 21st to 25th.
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Rural Land Property Tax
As already warned by the CNA, the deadline for submitting the Rural Land Property Tax Declaration (DITR) ends on September 30th. Failure to send the declaration generates a fine and other implications such as the non-release of the debt clearance certificate, the impossibility of joining any existing credit line and the impediment of transferring properties. To know more, access 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. Good production conditions have guaranteed an adequate supply of melons, grapes, mangoes and watermelons, which are at the beginning of the harvest season.
Even with the expansion of supply, the strong external demand and the revival of sales in the country have contributed to sustaining 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 falling prices. In the case of potatoes and onions, the intensification of harvesting in the Cerrado of Minas Gerais and Goiás was mainly responsible for the devaluations. In the case of lettuce and carrots, the week was marked by weak demand.
In relation to the external 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 recent days, five new fairs were held in Bahia, in the municipalities of Santa Bárbara, Itamaraju, Dário Meira, Mairi and Riachão do Jacuípe. In total, more than two hundred producers participated. This Saturday (26), Brasília hosts the second edition of Feira Segura in the drive thru model.
Sugar energy
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 import of North American ethanol with tax exemption. Therefore, the CNA supports the continuity of negotiations, which must be linked to the reciprocity of North Americans in the removal of the import tariff on Brazilian sugar by the United States. The objective is to avoid measures that protect producers from 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 16th and 22nd 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.
As for the sugar market, international consultancies and banks point out that, after a drop of 1.5% in global sugar consumption in 2019/2020, resulting from the coronavirus pandemic, an increase of 1.9% is estimated in the 2020/2020 season. 2021. The increase in consumption tends to partially offset the expected increase in sweetener production.
In New York, at Ice Futures, lots for October/20 varied between 12.50 and 13.00 cents per pound throughout the week. In the domestic market, a 50 kg bag of crystal sugar, measured by Cepea/Esalq, in São Paulo, remained quoted above R$ 86.00 and sustained increases throughout the week. Although production has grown this year, the good performance of Brazilian exports of the sweetener keeps prices firm or rising in the domestic market.
In the case of ethanol, the greater mobility of the population has increased the demand for the biofuel. The daily hydrous ethanol indicator, measured by Esalq/BM&FBovespa, sustained increases throughout the week and closed at R$1,898.0/m³.
Grains
With the end of the sanitary void, the 2020/2021 harvest is gaining attention from the sector. In Mato Grosso, soybean planting has already started and is progressing more intensely in irrigated areas and, still timidly, in rainfed areas in the last week. Good volumes of rain – between 25 and 50 mm – were recorded in the north of Mato Grosso, in Goiás and in the south of Mato Grosso do Sul, regions where soybean planting is expected to advance at a greater pace in the coming weeks.
The 1st harvest corn is delayed in planting in Paraná due to the lack of rain. According to the Department of Rural Economy (Deral), 34% of the areas had already been sown by September 22, a delay of 39% compared to the same period last year. However, the dry climate that affects corn planting 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.
On the international market, soybean prices fell during the week, but remain above US$10/bushel. American export sales support prices at good levels. In the last two weeks, the USDA reported daily sales of over 100 thousand tons to China. In 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 export parity. In some places in Paraná and Rio Grande do Sul, prices even exceeded those in ports, reflecting tight domestic supply in the off-season.
In the case of corn, Brazilian exports are estimated at 6.3 million tons in September. 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 continue to be remunerative for producers, reaching R$62/bag on B3, a record value for the November contract. The exchange rate devaluation, the high domestic demand for meat and the withholding of sales of the last batches of the off-season boost cereal prices.
Coffee
After a long period of drought, the main producing regions received rain 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 water storage deficit in the soil. The rainfall levels in the coming weeks will be decisive for the harvesting of the main Arabica coffee flowering expected for October.
The CNA has discussed measures to combat the drought that affects the country's main producing regions, such as improving rural insurance and other risk management tools.
Conab released the third survey of the 2020 Brazilian coffee harvest, estimated at 61.6 million bags. Despite the good productivity, the estimated volume is 25% higher than the 2019 harvest, but lower than that of 2018 (high biennial period), not representing a record.
Regarding prices, the Cepea/Esalq indicator for type 6 arabica started the week at a low, but still remains above R$530.00/bag. The Cepea/Esalq indicator for 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 stable compared to last week, with the price paid to producers remaining at R$4.10/Kg. At wholesale, according to CEPEA/ESALQ, the price of frozen chicken in the state varied throughout the week, but closed stable at R$5.77/kg, an increase of 10.3% in the month and 7% in 2020. Stability of prices is due to the loss of purchasing power of the population that naturally occurs 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 respectively R$4.15 and R$7.00/kg. As for the integrated production market, producers' remuneration remains stable in nominal terms.
In the egg market in the interior of São Paulo, the box with 12 dozen showed a slight drop this week, quoted at R$69.00, R$1.00 below the value negotiated last time. In Minas Gerais, the reference price closed the 23rd at R$70.00, also falling compared to the 16th, when it was quoted at R$75.00. Eggs have been the cheapest protein in recent months, but excess supply brings a lot of imbalance and new devaluations are expected.
In pig farming, state stock exchanges closed practically stable compared to last week, influenced by the heat of the last few days and the reduction in consumer purchasing power at the end of the month. The only increase reported was in Rio Grande do Sul, which expects to trade animals next week at R$7.35/kg (+1.4%).
Data from CEPEA show that the exchange ratio for pork/corn or pork/soybean meal continues to rise in the interior of São Paulo, with a decrease in the supply of inputs and pressure from the dollar on prices.
Dairy
At retail, UHT milk prices suffered a reduction of 2.37% throughout the week, trading at R$ 3.49/l. Mozzarella cheese prices remained stable throughout the week and at high levels, with a price of R$ 29.38/kg.
Imports of dairy products continued to grow in September, with volumes higher than in August.
Fat ox
The beef cattle market continues with a lack of animals for slaughter and spacing on the slaughterhouse scales. The big news is the reduction in the base differential between the states and São Paulo. Normally, this value is negative, as prices in other states are lower than in the state of São Paulo. But now the differentials are reducing and are even becoming positive, that is, higher prices in states like Minas Gerais and Pará.
Brazilian exports continue to accelerate, with the possibility of breaking the record for shipments and revenues again.
As for Covid, what worries the sector is the end of emergency aid, which has been supporting domestic consumption. By 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 be reflected in the prices of live animals delivered to 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 fell compared to last week (-8%), quoted at R$7.50. This is due to the fluctuation in volumes contracted by wholesale and retail on a weekly basis and at the end of the month, when families' income availability drops. There is no excess supply or drop in demand to worry producers.
During the pandemic, there was an increase in the consumption of tilapia by families, as a way of diversifying the menu. Furthermore, with the return of social activities, it is noted that tilapia has gained a larger audience, which contributes to a possible increase in per capita consumption in 2020.
In the foreign market, the favorable exchange rate has made Brazilian tilapia more competitive. Brazilian fish exports total 31 thousand tons in the year to August, an increase of 8.81 TP3T 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 fishing 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. Regarding seasonal work on farms, the document criticizes the “uncoordinated” establishment of quarantine criteria among EU member states, which makes the movement of workers difficult. In relation to specific sectors, the document highlights:
•Dairy, beef, veal and sheep: although the situation has stabilized to some extent, the sector is still concerned about future impacts arising from a second wave of Covid-19, potential restrictions arising from the economic recession, the future trade relationship between E.U. – United Kingdom and the impact of oil prices on price-sensitive markets;
•Cereals, oilseeds and protein crops: prices of high-oil sunflower seeds would have fallen by 30% in southern Europe year-on-year as a result of lower demand for frying fat. Furthermore, 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 completely halted honey production. In the most 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 that provides for 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 sector rules are established for cereals, rice, fruits and vegetables (including processed), wines, meat (cattle, goats, pigs and sheep) and dairy products (Agribusiness Promotion Division-II (DPA-II) – MRE).
– The Belgian Federal Agency for the Security of the Food Chain (Afsca) ordered, on September 18, the destruction of part of the country's pear production after finding that around 150 producers had used a Spanish organic fertilizer that contained matrine , an agricultural 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 showed a positive result for SARS-CoV-2 in the packaging of frozen fish from an establishment in Indonesia. The acceptance of international health certificates from the establishment in question was suspended for one week (Agribusiness Promotion Division-II (DPA-II) – MRE);
– According to the classification of the WTO Agreement on Agriculture and based on Chinese Customs data, in the first half of 2020, agricultural products account for 8.6% (US$ 95 billion) of China's total imports (US$ 1.1 trillion ). Of all Chinese agricultural imports during this period, 22% were supplied by Brazil (US$ 21 billion), placing the country in the position of main supplier of agricultural products to China. In terms of Brazilian exports to the Chinese market, in turn, agricultural products represent 51% of sales, with an increase in participation compared to the same period in 2019, when it was 43%. It is observed, however, that soybeans alone represent 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 of 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 increased the demand and prices for animal proteins, whose representation in bilateral trade increased significantly. On the other hand, the Sino-American “trade war” generated trade diversion from Brazil towards the Chinese market, especially soybeans (Agribusiness Promotion Division-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% from imports. The president of Expoflores, Alejandro Martínez, stated 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 thousand direct employees and 6 thousand indirect employees being laid off (Agribusiness Promotion Division-II (DPA-II) – MRE).
WTO
– A new phase of discussions on agriculture will begin at the WTO this September. WTO members will discuss, in the Agriculture Committee, the impact of Covd-19 on the agricultural sector and exchange information on their policies. Meeting in an extraordinary session, they will seek to advance negotiations on the sector, with a view to reaching a successful outcome by the 12th Ministerial Conference scheduled for 2021 (WTO, September 16);
– 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 continuous reforms of agricultural trade policy will be essential to meet global food security needs in the next decade. In his comments, Wolff emphasized the role of trade as a transmission mechanism for moving food from where it is abundant to where it is scarce, as well as the importance of trade policy – and the WTO rules framework – as a means to create predictable market conditions. and competitive for farmers (WTO, September 23, 2020);
– At a meeting of the Committee on Regional Trade Agreements (RTAs) on September 22, WTO members reviewed the services trade aspect of the Comprehensive and Enhanced Partnership Agreement between the European Union and Armenia and the Mercosur Free Trade Agreement 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 WTO General Agreement on Trade in Services (GATS). The EU and Armenia also agreed on obligations on government procurement, intellectual property, competition, 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 free trade area, increase investment opportunities and increase cooperation in areas of interest mutual (WTO, September 23);
– According to the WTO, world trade in goods fell by 14% in volume and 21% in value in the second quarter of 2020 compared to the previous period, due to Covid-19 containment measures. In the most recent data, the steepest falls were recorded in Europe (-21%) and North America (-20%), while Asia was relatively less affected (-7%) (WTO, 23 September 2020).
Source: DATA
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