MONTEVIDEO, URUGUAY — Uruguay’s biggest grains crop is corn, used to feed the country’s beef sector, which has expanded to meet growing international demand. Its wheat crop is smaller, but even so, most of it is exported, even after satisfying domestic demand.  

In its grain market report of May 19, the International Grains Council (IGC) put Uruguay’s wheat production in 2022-23 at 800,000 tonnes, unchanged from the previous month’s forecast. The 2021-22 crop was 900,000 tonnes. Uruguay also is forecast to produce 900,000 tonnes of rice, a figure unchanged both on the earlier estimate and the previous year’s crop. Almost all of it — 800,000 tonnes — is forecast to be exported, an unrevised number that is the same as the previous year’s volume of rice exports. 

For soybeans, the IGC forecasts production in 2022-23 at 2.6 million tonnes, an unchanged estimate that compared with the 2021-22 crop of 2 million tonnes. The IGC puts shipments of soybeans at 1.302 million tonnes in April-March 2021-22, down from 2.196 million during the same period a year earlier. 

In an annual report on the grains sector dated April 11, 2022, the USDA attaché forecast the 2022-23 wheat crop at 950,000 tonnes.

“Despite a projected increase in area of 4.5%, production is forecast to be similar to the past two crop seasons as Post takes the average yield of the past four years, which includes the past two which were record highs,” the report explained. This gives a projected yield of 3.72 tonnes a hectare. 

“Weather is forecast to normalize after two La Niña seasons, which in this region tends to be drier than normal,” the USDA said. “However, farmers in MY 2022-23 are expected to proceed in a somewhat defensive manner due to high input prices, especially fertilizers.

“While farmers want to take advantage of current high world prices, especially coming from two good crop seasons, the high cost and reduced availability of fertilizers and some crop protection products could negatively affect yield in the coming year. Uruguay imports all of its fertilizers and contacts indicate that it could be short of phosphorus and potassium for the winter crop season.”

The attaché’s forecast for 2022-23 wheat exports was 520,000 tonnes, with Algeria and Brazil continuing to be the main destinations. The report put domestic wheat demand at 440,000 tonnes. 

“Despite increases in the domestic price of flour, reflecting higher world wheat prices due to the war in Ukraine, flour consumption is quite inelastic,” the attaché said. “As in the past, the government and the private sector (millers and bakeries) could eventually reach some sort of temporary agreement to cap the price of flour in order to keep the cost and price of retail products at reasonable levels.

“The local bakery industry is also concerned about Argentina’s policies in subsidizing the price of flour through a trust financed by soybean meal and oil exports to try to contain retail prices of bread and bakery products. There is already a significant price gap between prices of goods in both sides of the border, encouraging Uruguayans to buy in Argentina.”

Wheat quality in 2021-22 “was good as a result of favorable weather,” the attaché said, suggesting that “the use of wheat for feed or ethanol will be quite limited, especially at current high wheat prices.”

According to the 2021 annual report on the subject, there are eight wheat mills in Uruguay. 

“Alur, the local state-owned alcohol company, which produces bioethanol, sometimes processes wheat, but normally uses corn and sorghum,” the report said. “Feedlots generally only consume wheat when it is low quality and priced accordingly.”

Record corn production

The attaché’s 2022 report forecast for 2022-23 corn production is 950,000 tonnes on 150,000 hectares. Both figures are the highest on record. 

“The animal feed sector is buying up all the corn as beef exports are booming and milk production is expected to continue to grow,” the report said “Seed technology has improved significantly in the past years, providing greater yield stability. More and more farmers understand the importance of incorporating corn in their soil rotation to maintain or improve productivity.

“Uruguay is not yet self-sufficient in corn and imports significant volumes from neighboring countries such as Argentina and Paraguay. Therefore, the import price parity sets a ceiling to the price of the corn produced locally.”

The attaché does not expect the country to export any corn in 2022-23.

Domestic consumption of corn in 2022-23 is forecast at 1 million tonnes. 

“The Chinese appetite for beef and some problems in world suppliers have opened new opportunities to local beef exporters,” the report said. “High world prices have caused live cattle prices in Uruguay to be the highest ever, encouraging cattlemen and producers to invest heavily in their operations.

“The volume of cattle finished on grain last year increased approximately 20% and a similar level of growth is projected in 2022. Cattle finished on grain are the largest consumers of corn, followed by the dairy and poultry sectors.”

Rapeseed emerging as key crop

In an annual report on Uruguay’s oilseeds sector, dated April 11, 2022, the USDA attaché forecasts the country’s 2022-23 soybean production at 2.8 million tonnes from 1.225 million hectares. 

“Growth in area has been slower than anticipated due to strong competition by cattle and dairy producers for marginal land and less foreign investment than in the 2008-14 expansionary period,” the report said. “Rapeseed has rapidly emerged as a key winter oilseed in recent years with MY 2022-23 planted acreage projected at 205,000 hectares and production of 316,000 tonnes.

“Securing sufficient fertilizer supplies due to disruptions caused by the conflict in Ukraine will complicate upcoming crop planning. Uruguay is dependent on imported fertilizer and stocks in the country are currently low. 

“Nitrogen and phosphorus fertilizer are currently available at high prices, but potassium is not available at all in some locations.”

The soybean crushing industry is limited in Uruguay because the country developed as a major soybean producer later than its larger neighbors, Argentina and Brazil, the attaché said, explaining that the biggest crushing plant is owned by COUSA and is near Montevideo. 

“The plant was built partially in response to Uruguay’s 2007 biofuels law that dictated that 5% of all diesel fuel in Uruguay be biodiesel derived from Uruguayan grown feedstock,” the report said. “The facility has an annual crush capacity of 250,000 tonnes, but it also processes sunflower and rapeseed. In recent years, it has proactively sought to source these commodities and their crush volumes relative to soybeans have grown.”

There are a number of small-scale soy crushing facilities around the country that produce meal and oil for local consumption, the report said. 

“Soybean meal is consumed by the local dairy, poultry, and pork industries,” the report said. “No major expansion is planned in the coming year in these sectors. In recent years, growing demand and knowledge diffusion have led to widespread adoption of rapeseed into crop rotations.”

The attaché noted that the crop “provides a yield boost to second crop soybeans compared to traditional winter cereals like wheat.”