Despite a challenging marketing year, CAMPI expects plantings to remain at about the same level as last cycle.

By Dario Bard

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In April, Argentina’s 2017/18 popcorn campaign got off to a good start, with export prices averaging above US$ 550 per MT FOB. Indeed, at the time it seemed that the Argentine popcorn industry’s intelligent production approach (which aims to balance production with demand) had succeeded in stabilizing prices.

But in May, prices began falling steadily as competitively priced new crop from Brazil and the U.S. started entering international markets. In a report prepared exclusively for IFT, CAMPI (Argentina’s popcorn board) cites spot market buys as low as US$ 450 per MT FOB during the months between May and July. Many CAMPI members considered those prices to be below the costs of restocking. From August onward, things improved, and by November, CAMPI’s monthly price update listed the average price of popcorn exports at US$ 517.41 per MT FOB.

Additionally, phytosanitary concerns around the presence of the fungus Stenocarpella Maydis affected movement into Iran and especially Russia, both of which are significant secondary markets.

This was the backdrop that faced Argentina’s popcorn industry as planting got underway. According to Diego Morales of Catajuy, given this panorama, contracting growers this time around was no easy task.

“Some growers we worked with for eight or nine years told us that they weren’t going to plant popcorn this time,” he says.

But despite the hardships, CAMPI estimates that the area seeded to popcorn this season will be about the same as last year.

Planting Conditions

Argentina plants three distinct popcorn crops. The first is usually planted from September to October in the primary popcorn growing area, which spreads across the provinces of Buenos Aires, Córdoba and Santa Fe. Traditionally, this crop is the largest of the three. The second is planted in the same area as a second crop. And the third is planted in the northern provinces from late December to January.

In the absence of official data, CAMPI members German Longobardi of Pop Company (Hathor Group), Carlos Tovagliari of Pop Argentina and José Maranessi of Alicampo surveyed their colleagues and prepared an exclusive report for IFT to provide readers with as complete an overview of this season’s popcorn planting as possible.

The report states that in the primary growing area, excessive rainfall in the first half of 2017 resulted in good soil moisture levels heading into this planting cycle. As a result, the seeding of the first popcorn crop kicked off in a timely fashion around mid-September. But then abundant rains added even more moisture to already saturated fields, making it impossible for the plows to continue seeding and resulting in flooding in some areas.

Nonetheless, CAMPI reports that producers in the primary growing region managed to get 70% to 80% of the targeted popcorn area seeded as a first crop. But some growers had better luck than others.

Morales of Catajuy, whose company contracts growers in the area of Pergamino, Buenos Aires, shares his personal experience: “We had planned to plant 70% of our crop in the traditional window and 30% as a second crop, but because of the weather, it ended up the other way around. We managed to plant around 30% of the crop from September 25th to October 10th and the rest was planted as a second crop after November 20th.”

From November to early December, the rains dried up and temperatures rose. But since soil moisture levels were high to begin with, it is unclear if this dry spell will impact yields. The weather over the next 30 days will be a determining factor.

Including the popcorn crop in the north, CAMPI projects that the planted area this time around will be about the same as last year, which, according to sources interviewed back then, was about 50,000 to 55,000 hectares.

Market Outlook

CAMPI projects that Argentina will sell between 200,000 and 210,000 MT of popcorn to international markets in 2017/18, ending the marketing year with zero carryover. That means that Argentina’s 2018/19 supply depends entirely on the next harvest, which will start in April in the primary growing area and wrap up in July in the north.

Meanwhile, the U.S. has produced abundant popcorn crops over the past several campaigns, which has led to increased U.S. exports at very competitive prices. From September 2016 to August 2017, CAMPI reports seeing an additional 35,000 MT of U.S. popcorn in markets that have traditionally been supplied by Argentina, including the United Arab Emirates, Saudi Arabia, India, Pakistan and Colombia.

In Morales’ opinion, the U.S. presence in those markets will not persist over the long-term.

“The U.S. had some excess production that included product with a relatively lower expansion rate that they were able to sell off at very competitive prices,” he explains, adding that he does not consider the U.S. a serious competitor, especially not in South American markets.

Instead, what worries Morales is Brazil. Over the past few campaigns, Brazil has discovered the right popcorn hybrids for its growing areas, and has produced good quality product off of higher yields. This has enabled Brazil to position itself as a significant supplier in a number of markets.

“That’s a problem for us,” says Morales. “Brazil gets more sunlight than we do in Argentina, and that means the popcorn has a better appearance. Many markets equate a nice, bright color with quality. If they get good yields, that also makes them competitive.”

But Brazil, the world’s second biggest popcorn market behind the U.S., had production issues the past two campaigns, which drove domestic popcorn prices above international prices and, consequently, tempered its exports.

Mato Grosso, Brazil’s top popcorn growing state, plants its crop in January and February. During that time, CAMPI will be keeping a close eye on the number of hectares that Mato Grosso growers seed to popcorn.

“I think the world popcorn supply situation is at its limit,” says Morales. “Add more popcorn to the global trade and markets will crash.”

CAMPI regards an export volume of 30,000 to 40,000 MT out of Brazil as compatible with maintaining a good global supply-demand balance. Anything above that could see prices crash like they did in 2015/16; that marketing year, Brazil exported 65,000 MT of popcorn and international prices plummeted below US$ 400 per MT FOB.

“Argentina used to export 230,000 to 240,000 MT a year,” says Morales. “Now we are sharing global markets with Brazil. Plus, we are seeing the U.S. penetrate price-sensitive markets where they are not normally competitive.”

In addition to increased competition in some markets, Argentina’s popcorn industry has also had to contend with phytosanitary concerns raised by Russia and Iran regarding the fungus Stenocarpella Maydis.

“This is a fungus that is present in the soil practically everywhere corn is grown in Argentina, Brazil and the U.S.,” explains José Maranessi of Alicampo in a follow-up interview. “So when those countries harvest their corn crops, the fungus is almost always present.”

However, continues Maranessi, Stenocarpella Maydis does not impact crop quality or yields, and has no adverse effect on consumers. Nonetheless, countries like Russia and Iran, both of which are free of Stenocarpella Maydis, fear it might contaminate their soil and therefore consider it a quarantine pest.

Russia has the strictest control measures. Until recently, it required testing for the fungus both at the loading facility and the arrival port. The problem with that approach is that the analysis for Stenocarpella Maydis is unreliable and can possibly turn out negative at one moment in time and positive at another. This procedure, therefore, set up a very risky game of Russian roulette for Argentine exporters. A popcorn shipment cleared by Argentina’s SENASA (National Service of Health and Agri-Food Quality) in the port of Buenos Aires could test positive for Stenocarpella Maydis upon arrival in Russia. To make matters worse, under Russian regulations, any shipment that tested positive had to be returned to its origin at substantial cost to the exporter. This deterred most popcorn exporters from doing business with Russia. And any intrepid traders that were willing to take the chance were completely frozen out in mid-2017 when the government of Russia sent the World Trade Organization a list of new requirements for several food products, among them an insistence that all corn imports be grown on farmland free of Stenocarpella Maydis. SENASA has communicated the impossibility of abiding by this requirement to its Russian counterparts and requested a return to the previous arrangement. As of this writing, Russia has yet to respond to this request.

In the case of Iran, the situation is not as severe. Authorities there only require that the shipment be tested at the loading facility and are perfectly willing to accept SENASA’s determination as the final word. However, this is still problematic for the exporter as the analysis for Stenocarpella Maydis can take up to a month, during which time the cargo being tested must be left with SENASA, incurring additional warehousing costs and creating logistical headaches for the exporter.

To address the concerns of the authorities at these destinations, CAMPI is pursuing two courses of action. First, it is working with SENASA on an information campaign directed at convincing authorities of the innocuous nature of this particular fungus and the nearly non-existent risk of propagation. Second, it is working with INTA, Argentina’s National Institute of Agricultural Technology, to develop treatments that can control the fungus. This latter effort has already yielded some promising results, but further study is required before one of these products can be deemed safe for commercial use.

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Dario Bard, IFT Journalist