Required Report - public distribution

**Date:** 4/19/2005

**GAIN Report Number:** UY5002

UY5002

**Uruguay**

**Oilseeds and Products**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Bob Hoff

U.S. Embassy

**Prepared by:**

Kari Rojas

**Report Highlights:**

Uruguayan soybean planted area is forecast to increase in marketing year
(MY) 2006/07 to 300,000 hectares (has.). Production will increase to
540,000 metric tons (MT). Sunflowerseed planted area is forecast at
130,000 has in MY2006/07. Production will be 160,000 MT. Soybean and
sunflowerseed crushing will remain flat, as protein meal needs are met
by steady imports.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Buenos Aires \[AR1\]

\[UY\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Soybean 3](#soybean)

[Sunflower 3](#sunflower)

[Consumption 4](#consumption)

[Sunflowerseed and Products Consumption
4](#sunflowerseed-and-products-consumption)

[Soybean and Products Consumption 4](#soybean-and-products-consumption)

[Trade 5](#trade)

[Sunflower Products Trade 6](#sunflower-products-trade)

[Exports 6](#exports)

[Imports 7](#imports)

[Soybean Products Trade 8](#soybean-products-trade)

[Imports 8](#imports-1)

[Exports 10](#exports-1)

# Executive Summary

The influx of Argentina capital into the Uruguayan countryside has
changed the face of Uruguayan agriculture. Similar to Argentina in
climate, culture, infrastructure, and in some instances, soil structure,
many Argentines view the Uruguayan production regions as an extension of
the productive region of Argentina (the so-called Pampa Humeda). Soybean
harvested area, alone, increased from 77,000 has in MY2002/03 to over
240,000 has. in MY2004/05.

The advantages of production in Uruguay are many. The most attractive
difference between the two countries is the absence of agricultural
exports taxes. Soybean exports in Argentina are taxed at 23.5 percent.
Additionally, a newly constructed bridge over the Argentine Delta area
now facilitates transit between Argentina's main soybean port area,
Rosario, and Uruguay.

# Production

## Soybean 

Consecutive droughts the past two years during critical crop growth
stages, combined with the growing threat of widespread soybean rust,
will make producers think hard about planting decisions next year.
Although fields that were infected with soybean rust were far enough
along in development to not be significantly affected, producers have to
take into consideration the possibility of more widespread incidents in
the coming year and the associated treatment costs.

Currently prices support an increase in planted area; however, there are
many months between now and planting season (the current crop is just
now being harvested) and things may change.

Post forecasts MY2006/07 soybean harvested area will increase slightly
to 300,000 has.. With average yields of 1.8 MT/has, production is
forecast at 540,000 MT.

Post estimates MY2005/06 soybean production at 500,000 MT on 280,000
has.. First crop soybeans, planted October 2004 -- November 2004, were
affected by drought that occurred before flowering. Second crop
soybeans, which are normally planted after wheat harvest in late
December, were not as affected by the drought. There are indications
that second crop soybean yields will be above MY2003/04 yields, or
around 1.8MT/has..

Post estimates MY2004/05 soybean production was 377,000 MT on 247,000
has.. Production was double the MY2003/04 production and harvested area
grew 213 percent. Yields were generally poor due to climatic stress
(drought), reaching, on average, 1.5 MT/has..

## Sunflower

Sunflower planted area next season will depend on the final results of
the current harvest and producer prices in relation to soybean
production. Last year's production margins for sunflower production were
very good, and sometimes better than margins for soybean production.
Increases in production due to better margins, compared to soybean
production, may be offset by decreases in production in areas with
phytosanitary problems, mainly stem rot due to fungus (*Phomopsis
helianthi*).

Post forecasts MY2006/07 harvested area at 130,000 has., unchanged from
current year. Forecasting yields near the 5-year average (1.2 MT/has.),
production is forecast at 160,000 MT.

Post estimates MY2005/06 sunflower seed production at 165,000 MT on
129,000 has.. Producers, hoping to repeat the previous MY's spectacular
performance, expanded planted area by 17 percent. Regardless of
producer's desires, however, it is unlikely yields will reach more than
1.3 MT/ha and production will fall slightly.

Post estimates MY2004/05 production at 177,000 MT on 110,200 has.. Last
year's sunflower harvest ended with record yields of 1.6 MT/has., well
above 10-year historical yields of 1.2 MT/has..

## 

# Consumption

Domestic demand for oilseeds has been relatively stable over the past
ten years. Total installed crushing capacity (soybean and sunflower) is
approximately 350 MT/day, or around 100,000 MT/year. Crushers are
running at about 60 -- 70 percent capacity.

## Sunflowerseed and Products Consumption

Sunflowerseed crushing is not expected to increase in the coming year.
Additionally, crushers may continue to have difficulties procuring
sunflowerseed due to the high demand from the export market.

Post forecasts MY2006/07 sunflowerseed crushing will be stable at 30,000
MT. Total sunflowerseed domestic demand is forecast at 32,000 MT.

Due to competition from the export market and flat domestic demand, Post
estimates MY2005/06 sunflowerseed crushing down slightly to 30,000 MT.
Total sunflowerseed domestic demand is estimated at 32,000 MT for
MY2005/06

Industry sources report total sunflowerseed crushing during MY2004/05
was 40,000 MT. Post estimates MY2004/05 total sunflowerseed domestic
consumption at 42,000 MT.

Sunflower meal domestic consumption is forecast to increase due to
increased demand for feed. Droughts in several areas throughout the
country have decreased pasture and increased the need to supplement the
cattle and dairy herds with balanced feed rations. Post forecasts
MY2006/07 sunflower meal domestic consumption at 30,000 MT.

Post estimates MY2005/06 sunflower meal domestic consumption up 25
percent from last MY, to 25,000 MT.

Sunflower oil domestic demand is driven by the food industry for
production of cooking oils and condiments. As overall sunflowerseed
crushing increased, so did sunflower oil production. While, 20 -- 30
percent of sunflower oil production is exported, the remaining
production is consumed domestically. Post forecasts MY2006/07 domestic
sunflower oil consumption at 8,000 MT, unchanged from the prior year.

## Soybean and Products Consumption

Soybean domestic demand is driven by feed industry demands for protein
meals. Although crushing capacity is approximately 100,000 MT annually,
about 25 percent of capacity is unused. Almost all crushing products are
consumed domestically (there are small exports of soybean oil). In fact,
Uruguay is a net importer of soybean oils and meals.

Post forecasts MY2006/07 soybean crushing at 25,000 MT, unchanged from
prior years. Seed use is approximately 7 MT/ has. Post forecasts soybean
feed, seed, and waste at 25,000 MT. Total soybean domestic consumption
is forecast at 50,000 MT.

Similar to the forecast year, Post estimates soybean crushing at 25,000
MT. Total soybean domestic consumption is forecast at 50,000 MT.

During MY2004/05, soybean crushing did not surpass 25,000 MT, according
to industry sources. Post estimates total MY2004/05 total soybean
domestic consumption at 50,000 MT.

Soybean meal domestic consumption is exclusively for feed. Increased
demand for protein meals in the livestock industries due to decreased
availability of forage because of drought and expansion of field crops
will maintain soybean meal domestic consumption.

Post forecasts MY2006/07 soybean meal domestic consumption at 65,000 MT,
unchanged from MY2005/06 estimate of 65,000 MT.

Post estimates MY2004/05 total soybean meal domestic consumption at
63,000 MT.

All soybean oil production is consumed domestically in the food
industry. Post forecasts MY2006/07 total soybean oil domestic
consumption at 19,000 MT, unchanged from the previous two years.

# 

# Trade

The following trade data is provided by private sources in the
agricultural and transportation sectors. There are several ports
operating in Uruguay and many are designated free trade zones. Nueva
Palmira, located on the Uruguay River, is the most important point of
export for unprocessed oilseed trade. Several private ports operate
within the Nueva Palmira free trade zone. Vessels up to the size of
Panamax can be loaded at these ports (maximum tonnage is approximately
42,000 MT), where the dredge is a minimum of 32 feet. Additionally,
barges that arrive from upriver (including from Paraguay, Argentina, and
Bolivia) can be discharged in Nueva Palmira.

Meals and oils are typically exported from the Fray Bentos/Rio Negro
area, which is located north of Nueva Palmira on the Uruguay River. The
dredge in this area is only 21 feet minimum and maximum tonnage that can
be loaded onto vessels is approximately 19,000 MT. As in Nueva Palmira,
upriver barges can be discharged.

Both Nueva Palmira and Fray Bentos/Rio Negro are considered 'free
zones'. Imports and in-transit cargo are not considered as entering into
Uruguay as long as they remain in the port area. This classification
makes these areas very attractive to companies wanting to consolidate
shipments.

The following is a map of the waterway in Uruguay:

![](media/image2.jpeg){width="5.143055555555556in"
height="2.8333333333333335in"}

## Sunflower Products Trade

### Exports

In comparison with MY2003/04, the composition of sunflowerseed exports
changed in MY2004/05. The bulk of sunflowerseed exports in MY2004/05 was
in the form of unprocessed sunflowerseed. Additionally, five percent
(6,913 MT) of total sunflowerseed exports were planting seeds. In the
prior year, sunflowerseed for planting made up over 16 percent of total
sunflowerseed exports. Holland was the only destination for planting
seeds (sunflower) in MY2004/05.

While unprocessed sunflowerseed exports fell year-to-year (MY03/04 to
MY04/05), sunflowerseed oil exports increased twenty fold. Total
sunflowerseed oil exports in MY04/05 were 2,623 MT, up from only 122 MT
in MY03/04. Over 75 percent of sunflowerseed oil exports were in bulk
(H.S. 1512.11.10). Exports of consumer ready quantities of 5 liters or
less to United States and Mexico also increased, as did shipments of
quantities over 5 liters to Brazil and Mexico.

Post forecasts MY2006/07 sunflowerseed exports up slightly to 140,000
MT. Sunflower oil exports next MY are forecast at 4,000 MT. Meal exports
are expected to remain at 1,000 MT.

Post estimates MY2005/06 sunflowerseed exports flat from the previous
year to 135,000 MT. Additionally, sunflower oil exports are estimated at
4,000 MT and sunflower meal exports are estimated at 1,000 MT.

Based on trade data from March 1, 2004 through February 28, 2005, Post
estimates MY 2004/05 sunflowerseed exports at 132,000 MT. The top
destinations for sunflowerseed were Holland, France, Portugal, and
Argentina. Sunflower oil exports totaled 2,622 MT during the MY.
Sunflower meal exports were 803 MT. See tables, below, for more detailed
information.

## 

![](media/image3.wmf){width="6.416666666666667in"
height="6.042361111111111in"}Source: NOSIS

### Imports 

Over 90 percent of MY2004/05 sunflowerseed imports were for planting.
Additionally, a small quantity (approximately 100 MT) was imported for
other uses. The bulk of sunflowerseed oil imports in MY2004/05 was from
Argentina, mostly in bottles of 5 liters, or less.

In MY2004/05, sunflower meal imports more than doubled from the previous
marketing year. Due to increased protein feed needs, and current drought
conditions, it is expected sunflower meal imports will increase in
MY2005/06.

Post forecasts MY2006/07 sunflowerseed imports will follow the trend of
the past few years and be around 1,000 MT, mainly for seed purposes.
Sunflower meal imports are expected to increase to 20,000 MT in
MY2006/07, as demand for feed in the poultry, beef, and dairy sectors
increase. Sunflower oil imports are forecast stable at 1,000 MT.

Post estimates MY2005/06 sunflowerseed imports at 1,000 MT, in line with
current imports. Local demand for sunflower meal has increased over the
past year due to a drought and the subsequent decline in forage supply.
Post estimates MY2005/06 sunflower meal imports will increase to 20,000
MT to cover increased demand. Sunflower oil imports are forecast stable
at 1,000 MT.

Data from private and transportation sources show imports of
sunflowerseed in MY2004/05 were 696,900 MT, down slightly from
MY2003/04's imports of 922,367. Sunflower oil and meal imports were
1,206 and 17,722 MT, respectively.

![](media/image4.wmf){width="6.416666666666667in"
height="5.941666666666666in"} Source: NOSIS

## Soybean Products Trade

### Imports

As soybean production increased in Uruguay over the past few years, so
has the import of inputs for production, or soybean seeds. Nearly 100
percent of imports of unprocessed soybeans for planting are from
Argentina. The import of seeds is likely to decline as producers begin
to save seed from harvest to plant the following year and planted area
begins to stabilize. Post forecasts MY2006/07 soybean imports at 7,000
MT.

Post estimates MY2005/06 soybean imports down slightly from prior year,
to 8,000 MT, due to decreased planting seed demand. Trade data from
NOSIS, a private data source based on customs data, shows MY2004/05
soybean imports (April 04 -- March 05) at 9,417 MT. Post estimates
MY2004/05 soybean imports at 9,000 MT.

Soybean meal imports, primarily from Argentina and Paraguay, grew by 19
percent from MY2003/04 to MY2004/05. As livestock, dairy, and poultry
production increases, Post forecasts MY2006/07 soybean meal imports will
increase slightly at 45,000 MT.

Post estimates MY2005/06 soybean meal imports will be 45,000 MT, based
on current protein needs.

Due to increased feed demands, stemming from a drought and subsequent
reduction in forage, soybean meal imports in MY2004/05 were 43,092 MT,
according to private data sources. Post estimates MY2004/05 soybean meal
imports at 43,000 MT.

Post forecasts MY2006/07 soybean oil imports flat at 14,000 MT.
Additionally, Post estimates MY2005/06 soybean oil imports at 14,000 MT.
Private source trade data shows MY2004/05 imports were 14,251 MT
compared with 14,403 MT the prior year (MY2003/04).

See the following charts for month-to-month imports.

![](media/image5.wmf){width="6.3381944444444445in"
height="5.161111111111111in"}

Source: NOSIS

### Exports

Export demand and international prices, although down from last year,
will continue to drive soybean exports in Uruguay. During MY2004/05,
exporters diversified their markets, shipping important quantities to
Iran (45,351 MT) and Turkey (22,850 MT). The free trade zone of Nueva
Palmira received the bulk of Uruguayan exports, approximately 284,000
MT.

Post forecasts MY2006/07 soybean exports will increase due to stable
domestic consumption, to 500,000 MT.

Post estimates MY2005/06 exports up slightly from prior year to 450,000
MT.

In MY2004/05, soybean exports more than doubled. Private data sources
show exports from April 2004 -- March 2005 were 414,657 MT. Top
destinations included Iran and Argentina. Post estimates MY2004/05
exports at 415,000 MT.

Source: NOSIS

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