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Over the past few weeks, News from the United States is beginning to show some confidence that demand will advance more quickly at current price levels. Certainly, The pace of US exports shows that recently foreign sales have been within or above the estimates made by market operators.
The above is logical, since International prices in real terms are located -in general- at the lowest levels since the late 1990s. Something similar is happening with the demand from factories for domestic crushing of US soybeans, which shows a crushing of the oilseed at record levels.
On the other hand, there is the supply. Clearly, the profitability figures projected by producers are, at best, slightly positive. And although this may seem more noticeable for Argentine producers, who must “resist” export duties, the PAIS tax (which will drop by 10% as of September 1) and the exchange rate gap, the situation in the rest of the producing countries is not far behind.
In virtually all places in the world where grain is produced on rented fields, the numbers don’t add up. And this is beginning to leave its mark. In this regard, the latest developments show that The area planted this year in Brazil would have a growth that would be the lowest in the last 10 years. In this sense, the high production costs, the increase in internal freight and the low relative prices already mentioned do not seem to be compensated by a devaluation of the real against the dollar, which is not enough for a country that lives, consumes and invests in its currency.
The growth rate of the planted area in Brazil is expected to be the lowest in the last 10 yearslourencolf – Shutterstock
Of course, in the short term, the “huge” US harvest, estimated by the United States Department of Agriculture (USDA) and subsequently corroborated by the ProFarmer specialist tour, is ahead.
The current situation is in charge today and it is good that it is so. However, The medium term poses other challenges: how to ensure that supply continues to grow in a context of increasing world population. Because while it is true that the rate of population growth on a global scale is decreasing, in nominal terms it continues to grow.
In this sense, at the time of writing this column, the United Nations World Population Prospect estimated the growth of the world population at more than 46 million people (net result between births and deaths) so far this year. In other words, practically an entire Argentina in less than a year.
The challenges of agriculture for our country are even more interesting. Leaving a financial business to enter a productive business often makes a good difference between those who do things well and those who don’t. Winston Churchill used to say: “Difficulties mastered are opportunities won.” Pay close attention.
The author is a partner of Nóvitas SA
Conocé The Trust Project
