Highlights:

Uruguayan wheat production for 2017/18 is forecast to drop significantly to 660,000 tons due to expected tight returns. As a result, exports will drop considerably to only 200,000 tons. Barley area and production is also expected to drop. Corn area for 2017/18 is expected to remain unchanged, but more normal yields than in 2016/17 would result in a drop in production to 440,000 tons. Therefore, corn imports are expected to rebound to 150,000 tons. No significant changes are projected for sorghum, which is not traded in significant quantities. Rice production for 2017/18 is forecast at 925,000 tons (milled basis), a slight drop from the previous year. Exports are expected to reflect the drop, with a total volume of 850,000 tons (milled basis).

Commodities:

Production

Wheat: Uruguay wheat production for crop 2017/18 is forecast down significantly at 660,000 tons, the lowest in a decade. This is a result of a drop in harvested area and normal yields (the past two seasons yields were higher than normal primarily due to good weather). Most producers are very discouraged with wheat as returns are very tight (or negative in many cases), due to low farm prices. Local producers indicate that at current production costs and prices, farmers producing on their own land need a yield close to the country’s average to be breakeven, while farmers renting land need to produce over 4.5 tons per hectare to make money. Wheat production is expected to be concentrated almost exclusively in its best production area in the southwestern area of the country in a radius within 200 kilometers from the Nueva Palmira port. Contacts’ range of projected area varies between 150-220,000 hectares. Such a low wheat area, plus an expected drop in barley area will hurt the country’s agricultural sector as the economy will move slower, with smaller sales of agricultural inputs, fewer trucking freight, less soil rotation, etc.

Wheat in Uruguay is planted in May-June and it is harvested between mid-November and December in a short period of time. Some producers are planting cover crops during winter to maintain soils free of weeds and add crop rotation to keep soil quality. Oats is the most commonly used but some 10,000 hectares are planted with wheat. Normally the cover crop is burnt with chemicals prior to planting soybeans in October-November, but some farmers can decide to harvest the wheat depending on economics and the condition of the crop at that time.

As a result of a cool/cold spring in 2016, and to the use of good technology which included higher fertilization than normal, the 2016/17 wheat crop was good, with high yields and better quality than the year before which had a low protein content.

Barley area is also expected to drop from 190,000 hectares in 2016/17 to 150,000 hectares in 2017/18. The local malting companies have announced that they will reduce the planted area as the crop last year was very good and there is a significant volume of barley left over. In early 2016/17, most contacts estimated an area of 140-150,000 hectares, but at the last moment another company came in and added more demand equivalent to approximately 40,000 hectares more. Yields were very good, at 3.6 tons per hectare, with a total record production of 680,000 tons. The quality is good, although a little low in protein. Production for 2017/18 is forecast at 520,000 tons. Barley production last year was significantly more profitable than wheat.

Corn: Production for crop 2017/18 is projected at 440,000 tons, lower than the previous year. Despite a practically unchanged planted area, we are not forecasting as good a yield as estimated for the 2016/17 crop which had very good rainfall.

Corn is primarily produced by farmers on their own land. Most of the small irrigated area is devoted to corn production. Roughly 70 percent of the corn is planted early (with yields of 7-8 tons per hectare) and 30 percent is planted late (with yield of 5 tons per hectare). Corn is profitable, but demands the largest investment of all crops. Contacts indicate that efficient farmers have a cost of production of about $750 per hectare and an income of $900 per hectare. Most corn is planted to rotate crops and preserve soil quality. Some producers also use the corn for their own animal feed consumption or sell it to close-by neighbors. The harvest of corn with high moisture is quite popular among dairies and feed lots; while corn silage use is low (sorghum silage is more popular). Due to Uruguay’s production landscape and culture, many farmers have their own small feedlots which they use to add value to their corn and sorghum.

Sorghum: Production and area for 2017/18 are forecast to remain practically unchanged. This crop is very dependent on the volume the local national oil company decides to purchase through contracts to use in its bioethanol plant in the west of the country for the official ethanol mandate program. Contacts indicate that purchases could reach as high as 120,000 tons, but that in 2016/17 the company will only purchase between 50-70,000 tons of sorghum and some wheat and corn. Although difficult to project, most contacts expect no change in 2017/18. Official estimates indicate that there are approximately 100,000 hectares planted with sorghum which is harvested as humid grain (with 28-30 percent humidity). Sorghum production is primarily localized in the area close to Paysandu city, where the ethanol plant operates.

Rice: Area and production for crop 2017/18 are forecast to drop marginally to 162,000 hectares and 1.32 million tons (rough production) respectively. Returns are expected to continue to be quite tight. However, a good level of water reservoirs is projected to encourage producers to maintain the area relatively stable. Planting will begin in September 2017, with expected production costs quite similar to the previous season.

Consumption

Wheat: Domestic consumption for crop 2017/18 is forecast at 500,000 tons, slightly lower than the previous season. Wheat consumption for food is quite inelastic, with yearly milling of about 400,000 tons. Current lower corn prices in the region will probably make wheat consumption drop somewhat as demand of wheat for ethanol and feedlots is expected to drop. Uruguay has roughly 15 flour mills of which 3 account for more than 70 percent of the market. One of the largest mills closed at the beginning of 2017, but press reports indicate it is in the process of reopening. There is a significant unused capacity in the sector.

Corn: Local consumption for crop 2017/18 is projected at 625,000 tons, practically unchanged from the previous two years. The poultry and egg industry together consume approximately 200-250,000 tons, while cattle use (dairy and feedlots) totals approximately 350,000 tons. It is unknown if the national oil company will use some corn to produce ethanol as it did in 2016. The dairy sector is going through difficulties due to low international milk prices. A key demand for corn is the cattle produced to export beef to the EU under the 481 Quota of high quality grain fed beef which the EU granted as compensation to the US as a result of the dispute on hormones on beef. Contacts in Uruguay note concerns that that this quota could be eliminated by the EU over the next few months. If that is so, this could have a negative impact on the consumption of corn in Uruguay.

Sorghum: Domestic consumption in 2017/18 is forecast to remain unchanged at 260,000 tons. Grain ethanol and the dairy and beef sectors are the major users of sorghum. Uruguay also consumes significant volumes of humid grain sorghum for dairy and beef production.

Rice: Total domestic rice consumption is forecast to remain flat at 60,000 tons (milled basis). The private industry estimates a per capita consumption of 12-13 kilos while the official number is higher. Seed use is estimated at 24,000 tons (rough basis), with approximately 150 kilos of seed per hectare.

Trade

Wheat: Exports for crop 2017/18 are forecast at 200,000 tons, significantly lower than the previous past two crops, and the lowest of the past 12 years. The main reasons for such a drop are the low beginning stocks and a projected smaller wheat production. Practically of this small volume is expected to be shipped to neighboring Brazil, the natural market for Uruguayan wheat. Exports in 2016/17 are estimated at 400,000 tons, with Brazil the main destination, followed by Algeria which is expected to purchase about 150,000 tons. This year’s wheat quality is good, far better than the previous’ crop season. Traders indicate they are shipping wheat with protein ranging between 11.5-12.0 per cent. Due to the large barley production in crop 2016/17, local traders estimate that 60-90,000 tons will be exported.

Corn: Uruguay usually imports 150-200,000 tons of corn for animal feed as its domestic production is not able to meet the total demand. Imports for crop season 2017/18 are forecast at 150,000 tons, higher than last year due to smaller beginning stocks and expected smaller corn production. Imports come primarily from Paraguay by barge and from neighboring Argentina.

Sorghum: There is practically no trade related to this commodity.

Rice: Exports for 2017/18 are forecast at 850,000 tons (milled basis), somewhat lower than the previous season as a result of a projected smaller crop. The main destinations are expected to be Brazil, Middle East countries (primarily Iran and Iraq), Peru, Mexico and Venezuela. Of Uruguay’s rice exports in CY2016, almost 70 percent was milled, 14 percent was brown rice, 8 percent broken rice and 8 percent paddy rice. The average export price for Uruguay in CY2016 was $440 per ton, the lowest since 2007. Local traders indicate that current prices range between $460-500 per ton. More than 80 percent of Uruguay’s rice exports in 2016 were made by 6 companies (with the top exporter accounting for roughly 40 percent).

Wheat

Wheat

2015/2016

2016/2017

2017/2018

Market Begin Year

Dec 2015

Dec 2016

Dec 2017

Uruguay

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

330

330

222

220

0

190

Beginning Stocks

192

192

188

204

0

79

Production

1191

1200

821

780

0

660

MY Imports

20

20

25

25

0

25

TY Imports

23

23

25

25

0

25

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

1403

1412

1034

1009

0

764

MY Exports

725

725

500

400

0

200

TY Exports

596

596

650

500

0

200

Feed and Residual

150

60

75

80

0

50

FSI Consumption

340

420

345

450

0

450

Total Consumption

490

480

420

530

0

500

Ending Stocks

188

204

114

79

0

64

Total Distribution

1403

1409

1034

1009

0

764

Corn

Corn

Market Begin Year

Uruguay

2015/2016

2016/2017

2017/2018

Apr 2016

Apr 2017

Apr 2018

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

83

83

88

79

0

80

Beginning Stocks

191

191

188

153

0

108

Production

487

487

460

500

0

440

MY Imports

140

130

200

80

0

150

TY Imports

111

111

170

60

0

150

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

818

808

848

733

0

698

MY Exports

5

5

35

0

0

0

TY Exports

0

0

35

0

0

0

Feed and Residual

500

500

520

500

0

500

FSI Consumption

125

150

130

125

0

125

Total Consumption

625

650

650

625

0

625

Ending Stocks

188

153

163

108

0

73

Total Distribution

818

808

848

733

0

698

Sorghum

Sorghum

2015/2016

2016/2017

2017/2018

Market Begin Year

Apr 2016

Apr 2017

Apr 2018

Uruguay

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

67

67

91

52

0

52

Beginning Stocks

54

54

30

30

0

50

Production

238

238

390

280

0

260

MY Imports

10

10

10

0

0

0

TY Imports

9

9

10

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

302

302

430

310

0

310

MY Exports

12

12

15

0

0

0

TY Exports

8

8

15

0

0

0

Feed and Residual

160

160

275

160

0

160

FSI Consumption

100

100

100

100

0

100

Total Consumption

260

260

375

260

0

260

Ending Stocks

30

30

40

50

0

50

Total Distribution

302

302

430

310

0

310

Rice, Milled

Rice, Milled

2015/2016

2016/2017

2017/2018

Market Begin Year

Apr 2016

Apr 2017

Apr 2018

Uruguay

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

161

161

160

166

0

162

Beginning Stocks

166

166

18

18

0

24

Milled Production

913

913

910

966

0

925

Rough Production

1304

1304

1300

1380

0

1321

Milling Rate (.9999)

7000

7000

7000

7000

0

7000

MY Imports

0

0

0

0

0

0

TY Imports

0

0

0

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

1079

1079

928

984

0

949

MY Exports

1001

1001

855

900

0

850

TY Exports

996

996

850

900

0

850

Consumption and Residual

60

60

60

60

0

60

Ending Stocks

18

18

13

24

0

39

Total Distribution

1079

1079

928

984

0

949