After years of tests followed by planting under pilot agreements between Bioceres and a small number of farmers, the company has started distributing seeds to agricultural input retail companies in the South American country, Trucco told Reuters on the sidelines of the BMO Global Farm to Market conference in New York.

“Hopefully we can have it available in Brazil as well, in one or two seasons,” Trucco said.

Genetic modification involves altering a plant’s makeup by transferring DNA from one organism to another and is common in crops such as corn and canola. This differs from gene editing technology like CRISPR, which typically modify a plant’s existing DNA.

Some consumer groups oppose genetic modification of wheat over concerns about human health since it is a widely used ingredient in bread and pasta.

Trucco said that with more approvals from governments and industry groups, GM wheat is becoming more accepted.

Bioceres developed HB4 GM wheat to resist drought, a recurring problem in Argentina in the last decade.

The company said the seed yields around 20 per cent more crop than a conventional seed during droughts.

“It is almost like an insurance policy,” Trucco said, adding that the product’s market share in Argentina is a single-digit percentage in its first season of sales.

He expects sales to improve once the company gains scale, allowing Bioceres to price the seed more competitively.

Bioceres’ GM wheat is approved for planting in Argentina, Brazil and Paraguay so far. Processing and use of the grain is approved in more countries, Trucco said, including the United States.

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Contracts for frozen concentrated orange juice (FCOJ) at ICE hit a high of $3.292/lb. during the session, the second highest price ever, just shy of the record of $3.3175/lb. seen on Aug. 17 (all figures US$).

Florida’s orange crop this year was already on the way to being small, only around half the size it produced just two years ago, due to diseases and erratic weather. The hurricane will exacerbate the situation.

“There is little hope for a bigger crop next year,” said commodities analyst Judith Ganes.

Fields in Florida were still recovering from the impact of hurricane Ian in 2019, while also suffering from a bacterial disease known as greening.

Authorities in Florida have yet to evaluate damage to infrastructure and agricultural production as the storm moved over to Georgia.

Also on Wednesday, Brazilian industry group CitrusBR said in a statement that stocks of orange juice at the end of the 2022-23 season (July-June) fell 40 per cent to 84,745 metric tonnes, the lowest level since the group started to collect the data 12 years ago.

CitrusBR said the fall is a result of a smaller-than-expected crop in the world’s largest orange juice producer and exporter, as well as falling juice yields from the fruits.

— Reporting for Reuters by Marcelo Teixeira.

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Precise information on losses for citrus producers in top grower Florida will take days to be released, analysts said, as people in the area deal with power outages and flooding makes it difficult to check on farms. Orange juice futures jumped in the last three sessions.

Florida orange production was already expected to be poor, as planted areas have been falling yearly due to real estate expansion and the spread of the greening fungus disease.

According to the U.S. Department of Agriculture (USDA), U.S. orange production was estimated to fall 13 per cent to the lowest in over 55 years at 3.5 million tons before the storm.

“Some of the growers that are still investing in citrus production in Florida, battling the disease with new varieties, will be hard hit by this storm,” said soft commodities analyst Judy Ganes.

She said that the strong winds have likely “transported” the greening fungus from abandoned orange farms to renovated ones, wasting the work and investment.

Ian’s aftermath would be bad for the juice industry.

Although imports from Brazil and Mexico currently make up for most of the orange juice consumed in the U.S., Florida’s production was important to the industry since it is mostly the not from concentrate (NFC) variety, which has gained popularity among consumers compared to the older style, frozen concentrated orange juice (FCOJ).

Foreign suppliers prefer to export FCOJ since it takes less space in vessels and is easier to handle.

Ganes said that if there is a shortage of NFC juice in the market, or if prices for that skyrocket, the industry could further lose share for other beverages.

— Reporting for Reuters by Marcelo Teixeira.

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Container-based transportation has been hit by sky-high costs and delays amid booming shipping demand, while container terminals at ports struggle to deal with the flow.

Commodities such as refined sugar, coffee, rice, cotton and cocoa have moved from dry bulk vessels to containers in the past since the large boxes were more practical and offered good quality control. But now shippers are moving back, at least temporarily.

“Around 80 per cent of the trade on refined sugar was done using containers before the pandemic. This has now fallen to around 60 per cent,” said Paulo Roberto de Souza, CEO of Alvean Sugar, the world’s largest sugar trader.

According to Souza, the change is only not bigger because there are not a lot of small vessels available in the market.

Data from shipping agency Williams regarding port movement in Brazil, the world’s largest sugar exporter, shows that volumes of refined sugar transported using containers fell 48 per cent in June and July (latest data available) compared to the previous year.

Bob Cymbala, owner at food trader A+J Global USA, based in Vancouver, said that some clients are turning down offers due to high prices for container freight, looking for shipping alternatives instead.

One of his clients, a rice exporter in India, is looking to use a dry bulk cargo to ship to Western Africa a volume of rice equivalent to 10 full containers.

Coffee exporters are not considering a change away from containers yet, besides the difficulties, mostly due to concerns over quality. They say containers, with proper lining, better preserve coffee characteristics such as smell and taste.

— Reporting for Reuters by Marcelo Teixeira.

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The data from Brazil’s INPE space research agency, which showed deforestation soaring 29.5 per cent to 9,762 square km for the 12 months through July 2019, sparked an uncharacteristic admission by the government that something needed to be done to stem the tide.

It was the worst level of deforestation since 2008, heaping further pressure on the environmental policy of Bolsonaro who favours developing the Amazon region economically.

The Amazon is the world’s largest tropical rainforest and is considered key to the fight against climate change because of the vast amounts of carbon dioxide it absorbs.

Risks to the forest drew global concern in August when fires raged through the Amazon, drawing sharp criticism from France’s President Emmanuel Macron.

At a briefing to discuss the numbers, Environment Minister Ricardo Salles said the rise in deforestation showed the need for a new strategy to combat the illegal logging, mining and land grabbing which he said were to blame.

Environmentalists and nongovernmental organizations placed the blame squarely on the government, saying that Bolsonaro’s strong pro-development rhetoric and policies to weaken environmental enforcement are behind the rise in illegal activity.

“The Bolsonaro government is responsible for every inch of forest destroyed. This government today is the worst enemy of the Amazon,” said Marcio Astrini, public policy co-ordinator for Greenpeace, in a statement.

Bolsonaro’s office directed Reuters to remarks made by Salles and another official and did not comment further on the issue.

In August, Reuters reported Bolsonaro’s government had systematically weakened environmental agency Ibama, grounding a team of elite enforcement commandos and forbidding agents from destroying machinery used to illegally deforest.

Brazil’s Climate Observatory, a network of nongovernmental organizations, said the 2019 increase in deforestation was the fastest in percentage terms since the 1990s and the third fastest of all-time.

In response to the numbers, Salles vowed to roll out a series of measures to counter the rising deforestation, including stepping up enforcement efforts assisted by high-resolution satellite imaging.

The minister said he would meet governors of Amazon states on Wednesday to discuss tactics to counter deforestation.

All options are on the table, according to Salles, including mobilizing the military for use in environmental enforcement operations.

Government reversal

Salles’ recognition that deforestation is indeed on the rise comes after months of the government casting doubt on preliminary monthly data showing destruction was skyrocketing.

At multiple press briefings earlier this year, Salles alleged the monthly data was unreliable and contained inconsistencies. He had urged journalists not to report the monthly figures and wait for the annual data, announced Monday.

Bolsonaro had accused the INPE space research agency of lying about the monthly data. In a high-profile dispute, then-INPE chief Ricardo Galvao stood by the data and called Bolsonaro “a joke of a 14-year-old boy that is not suitable for a president of Brazil.” Galvao was later fired.

The annual figure accounts for seven months under Bolsonaro, but also measures five months under the previous government.

It also does not account for destruction after July. Preliminary data for August to October shows deforestation more than doubled compared to the same period a year-prior to 3,704 square km.

NGOs say they fear that protections could be weakened further as the government considers allowing commercial agriculture on native reserves, expanding wildcat mining and allowing for illegally occupied land to be “regularized.”

Beef prices are also at record highs in Brazil, leading some environmentalists to fear it could fuel land grabbing for cattle ranching — one of the biggest drivers of deforestation.

“The coming years could be even worse,” said Carlos Rittl, executive secretary for Climate Observatory.

— Reporting for Reuters by Marcelo Teixeira; writing by Jake Spring and Stephen Eisenhammer.

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FCStone estimated during a commodities outlook conference in Sao Paulo that China’s pork meat production will fall to 38 million tonnes in 2019 from 54 million tonnes in 2018. It expects the production to fall further to 34 million tonnes in 2020, as the country will continue to struggle to control the devastating disease.

Renato Rasmussen, FCStone’s market intelligence director in Brazil, said that China could take up to seven years to return to production levels near 50 million tonnes per year, which will leave open a window of opportunity for meat exporters.

Besides rising imports of pork, he sees substitution of animal protein consumption in China, with increasing volumes of beef and poultry.

Rasmussen, who said the estimates released on Monday were prepared with data from FCStone analysts in China, expects the European Union and some other Asian countries such as Japan and South Korea to benefit from rising Chinese pork imports.

He said the sharp Chinese tariffs imposed on U.S. pork will likely limit American shipments.

China announced last week that it will impose an additional 10 per cent tariff over U.S. pork imports from Sept. 1, taking the total tariff to a staggering 72 per cent.

The analyst said Brazil could benefit from the situation, not only from higher pork exports but as well by shipping more beef and poultry.

“I believe beef trade could benefit the most, because it would be a more natural transition for Chinese consumers to opt for beef than poultry,” he told Reuters after his presentation.

Despite the opportunity for global meat exporters, grain producers could lose out since Chinese use of animal feed is expected to fall sharply.

FCStone projects that if swine meat production in China falls as much as 40 per cent, consumption of animal feed would fall by nearly 37 million tonnes per year. Corn use on animal feed could fall by 23 million tonnes, while soymeal use could fall by 10 million tonnes.

“China will overcome the situation, but it will take time. The country will have to completely modernize its pork production system,” Rasmussen said.

— Marcelo Teixeira reports on commodities for Reuters from Sao Paulo.

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The joint venture is the largest deal in Brazil’s bioenergy sector since Royal Dutch Shell joined forces with Cosan to form industry leader Raízen in 2011.

Together, Bunge and BP will manage 11 cane processing plants in Brazil, with capacity to crush 32 million tonnes of cane per year, putting them behind just Raízen and Biosev, controlled by commodities trader Louis Dreyfus.

The deal gives BP a key role in Brazil’s booming ethanol market ahead of a new federal policy next year aimed at boosting use of biofuels, which are used interchangeably with gasoline in Brazilian passenger cars.

“Brazil is the Saudi Arabia of biofuel,” BP’s head of Alternative Energy, Dev Sanyal, told Reuters. He added that the new venture was cash-flow positive.

Bunge said it will receive cash proceeds of $775 million as part of the agreement, which it expects to use to cut debt.

Bunge shares opened up more than 3 per cent in New York before reducing gains to 1.8 per cent. BP rose 0.7 per cent in London.

The U.S.-based company has tried to sell its sugar operation in Brazil in the past with no success. It then tried listing shares of the unit in Sao Paulo last year, but canceled the plan, citing adverse market conditions.

Bunge sold its sugar trading business to Wilmar International Ltd in August. Its bioenergy unit posted losses in five of the past six quarters and the company forecast results for the unit would be roughly break-even in 2019.

“This partnership with BP represents a major portfolio optimization milestone for Bunge which allows us to reduce our current exposure to sugar milling,” Bunge CEO Gregory Heckman said in a statement.

Market conditions have improved for ethanol in Brazil, with strong demand and better prices, but the global sugar market remains challenging.

“I think the companies together will be able to have large synergies, there will be great optimization of resources and cost reductions,” said Arnaldo Corrêa, a sugar and ethanol consultant in Brazil.

“It is great news for the sector, because the deal creates a much stronger player. All those worries about the future of Bunge’s assets disappeared,” he added.

The joint venture, named BP Bunge Bioenergia, will operate on a standalone basis, headquartered in Sao Paulo. Besides sugar and ethanol, the company has capacity to produce electricity fueled by waste biomass from sugarcane.

“The new company will certainly focus on fuel and electricity, which will have a growing importance as Brazil’s economy recovers,” said Plinio Nastari, chief analyst at Brazilian consultancy Datagro.

The deal is expected to close in the fourth quarter of 2019.

Reporting by Marcelo Teixeira in Sao Paulo; Shradha Singh in Bengaluru; Karl Plume in Chicago; Susanna Twidale and Shadia Nasralla in London

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China already buys around 80 percent of Brazilian soybean exports. According to official data, Brazil exported 55 million tonnes of soybeans to China from January to September, while sales of soymeal – crushed soybeans used for animal feed – were 209,000 tonnes.

In a video message to participants at a biodiesel conference in Sao Paulo, Abiove’s head André Nassar said there was a need to increase exports of meal to help local crushers that are facing rising costs for soybeans.

Nassar is part of a Brazilian delegation accompanying agriculture ministry officials visiting China this week to discuss bilateral trade.

While Brazilian soy farmers have benefited from a trade spat between United States and China, which applied a 25-percent additional tax on U.S. soybean imports, Brazilian crushers have seen supplies of soybeans shrink and production costs rise.

“It could be a win-win solution. China could diversify their imports by buying more meal from Brazil, something that in turn would help our crushers,” said Nassar in the message during the Biodieselbr 2018 conference.

Brazilian soymeal exports to China face higher taxes than soybeans. Abiove said it was negotiating with Chinese government officials for a quota to ship meal to China either tax-free or with lower taxes.

In coming years, soy processors are likely to see an uptick in soymeal production as a result of new biodiesel blending guidelines approved last week by the government.

The share of biodiesel in diesel is expected to increase by 1 percentage point every year from 2019 to 2023, from 10 percent currently to 15 percent.

That should increase demand for soyoil – which biodiesel in Brazil is mostly made from – but crushers need to find new markets for the extra soymeal created as a byproduct of the process.

Brazilian soyoil exports could fall next year due to rising local demand for the oil from biodiesel producers and stable crushing capacity, Nassar said.

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The canal’s administration is looking to increase its participation in rising Brazilian grain exports, since a large part of grain trade expansion in Brazil is via new terminals in the northern part of the country, which are closer to the canal.

“We started to exchange information, ideas, with the Aprosoja association to explore possibilities on cargoes leaving Brazil’s northern ports and using the Panama Canal to reach Asian markets,” Jorge Luis Quijano, the canal’s chief administrator, told Reuters by phone.

Aprosoja is the entity representing soy and corn producers in Mato Grosso. Quijano was in Cuiaba, the state’s capital, for the signing.

Only about two million tonnes of Brazilian soy went through the canal last year, out of annual soy exports of around 60 million tonnes. Brazil is the largest exporter of the oilseed.

Most of Brazil’s grain exports are shipped via the Atlantic Ocean, passing by the Cape of Good Hope, to reach China and Japan. But capacity expansion in the northern ports and increased soy and corn production in the centre-west might change that.

“We have studies showing that vessels coming from North Brazil and going to destinations like Yokohama could save up to five days using the expanded Panama Canal,” Quijano said.

He said the draft of the canal’s Panamax locks is similar to that of the Amazon ports.

Brazil’s northern ports increased shipments of grain volumes by 80 per cent in 2017, according to government data, and already account for around 40 per cent of total Brazilian grain exports.

Besides soybeans, Brazil has become a very large corn exporter. Large commodities traders such as Bunge, ADM and Louis Dreyfus have built operations in the northern ports and are planning to increase exports from the region.

— Marcelo Teixeira reports on commodities and the energy sector for Reuters from Sao Paulo.

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Under the plan, the unit currently based in the Netherlands would be responsible for managing all of the company’s international operations, with parent company JBS SA maintaining management of beef operations in Brazil.

It is the second time JBS SA has tried to reorganize its operations by moving management of international businesses to another country. The company scrapped a plan to move its headquarters to Ireland in October after opposition from BNDES Participacoes SA, the investment arm of Brazil’s development bank, who is a major shareholder.

JBS said Wesley Batista would be the chairman at JBS Foods International, with Gilberto Tomazoni, who has held several positions in the company’s administration for the last four years, taking the post of CEO. The unit would also manage the large Brazil-based food processing subsidiary Seara Alimentos.

“The company believes the new proposed structure and the IPO plan will reflect its global production platform, its product portfolio and the large international client base,” the firm in a filing to the Brazilian market regulator.

Batista, currently CEO of JBS SA, said at the time of the unsuccessful headquarter move to Ireland that the company had other options to change its structure, including a possible U.S. listing.

JBS said it planned to conclude the share offering in the first semester of 2017 but had yet to define how many shares it would offer and at what price.

The company is expected to give more details regarding the reorganization during a call with investors and analysts on Tuesday.

JBS currently manages more than 200 production facilities around the world, marketing products under brands such as Swift, Friboi, Seara, Pilgrim’s Pride, Gold Kist Farms, Pierce, 1855, Primo and Beehive.

Its Canadian assets include one of the country’s biggest beef packing plants — the former XL Lakeside plant at Brooks, Alta., with capacity to process about 4,000 head of cattle per day — and a cattle feeding operation nearby.

The company reported total revenues of 163 billion reais in 2015 (C$63.2 billion).

— Marcelo Teixeira is a Reuters correspondent based in Sao Paulo.

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