South America Weekly February 22 - 26

The three amigos - soybean, chicken and pig

Welcome to our weekly roundup of news from South America.

Mosoj ESG provides information, data and analyses relating to South America integrating Environmental, Social and Governance topics to promote sustainable development.

The three amigos - soybean, chicken and pig

Last week, we took a deep-dive in the world of soy to understand further the sector, given its economic and strategic importance, particularly for Mercosur. Indeed, relative to other economic blocs, it is a major player in the global scene accounting for 47% of harvested area and 58% of global export value.


The sector’s growing importance is also visible when looking at the proportion of soybean harvested area out of total cropland. On this basis, Uruguay’s growth as a soybean producer has been pretty spectacular, with a CAGR of 28% since 2000.

Source: FAOSTAT and Mosoj ESG calculation

Importantly, most of the production (77%) is aimed at feeding other animals, mainly poultry, pigs and livestock that together represented 64% of soy production end-use. Since, a significant amount of soy products end up as animal feed to chickens and pigs, we decided to take a further look at soybean consumption.

As such, we ran an analysis based on a research covering Argentina, a country where diet for chicken and pigs is mainly composed of maize and (processed) soybean. Based on a “model” chicken and pig – with respectively a feed conversation ratio of 2 and 3, and how much they consume of soybeans, we were then able to extrapolate an estimate of total consumption of soybeans in a given year by animal.

Source: FAOSTAT and Mosoj ESG calculation

This exercise also allowed us to examine in more details the destination of soybean. Unsurprisingly, exports grew to be the main destination of South America’s soybean production, from 30% in 2000 to 50% in 2019. As it is often reported, a good portion of these exports would have gone to China as animal feed. For instance, China produced around 15 million tonnes a year of soybeans over the past three years, and by our estimation its pig industry would have consumed ca. 56 million tonnes of soybeans a year, a big gap to fill.

Source: FAOSTAT and Mosoj ESG calculation

Finally, for Brazil, Bolivia and Paraguay, we also found a relatively strong positive relationship (running a regression analysis) between the number of hectares used for soybean cultivation and cattle unit per land. This basically establishes that in those countries, an increase in cattle heads equates to an increase in soybean-based feed, i.e. land use for soybean production.

Since deforestation is mostly commodity-driven in those three countries as per FAO data, and as most of new soybean production goes towards exports, it would thus suggest that deforestation is the result of exogenous variables influencing the South American ecological system. As such, any efforts to limit deforestation in South America would have to include demand-side solutions, particularly from China.


Brazil’s public debt rises to $920 bn

Brazil-Risk jumps 14% to the highest level since November

State Companies recover $7.2 bn

BNDES makes up $2.1 bn with the sale of the last shares of Vale

Vale reverses loss and profits $4.8 bn in 2020

Interference in Petrobras causes state-owned company to decline 21%

Banco do Brasil announces $2.9 bn for pre-custody for the 2021/22 crop year

Norway withdraw $2.7 bn from Brazil

Mercedes-Benz confirms scheduled investment of $436 mm in Brazil until 2022

Brazil reaches the mark of 500,000 consumer units of distributed photovoltaic generation

Isa Cteep issues $124.5 mn in green bonds for sustainable projects

Energias do Brasil: profit rises 40.2% in the fourth quarter of 2020

JP Morgan bank warned that Argentina’s net reserves reach $3 bn

China invests almost $ 5 bn in Argentina’s railway business

Edesur: sales fell 5.7% in 2020 and lost $67.64 mn

YPF placed debt securities for $122 million

Luxury tax may increase car prices by up to 11%

January trade balance recorded $1.07 bn surplus

Mining exports fell by 19% in 2020

Knowledge industry to offer more than 500,000 jobs by the end of the decade

Argentina registered a financial deficit of $33.88 mn in January

Toyota suspends production due to lack of workers, loses $15m in exports

Antofagasta plc surpasses $18 billion market value thanks to copper

Copper higher than $4 for the first time in almost 10 years

Chile files arbitration suit against Albemarle over lithium royalties

Trade Activity Index rose 4.3% year-on-year in January

Lithium Chile closes its $3.5 mn financing

Indian companies sell military equipment to Chile worth $18.7 mn

Pension fund withdrawals reach $34,890 bn

Unemployment reached 10.7% in 2020

AngloGold to invest $2 bn in two projects this year

$34,6 mn for two PV projects in department of Atlántico

GreenYellow to invest $43 mn in renewables in 2021

Fitch: Colombia must increase permanent income by 2% of GDP for fiscal consolidation

Colombia aims to finish $4,3 bn of 4G highways in 2021

Central Bank profits in 2020: $2,4 bn

79% of energy in Colombia comes from renewable sources

Peru’s Southern Copper to advance $5.4 bn projects development

Nexa Resources to invest $48 mn in its Peruvian copper project

Arca Continental obtains $120 mn of green financing from Peruvian banks

Over 70,000 of Peru’s 200,000 restaurants had to close due to lockdown

Geothermal power could supply electricity with a $1 bn investment

Over 58,000 Peruvians downloaded app to work with the government

Telefónica has a $199.67 mn debt to Peru

Exports fell 10.3% and imports dropped 27.7% in January

Dairy farmers say 60% of their production is affected by blockades

San Cristobal mining company’s sales fall 41% in one year

Soybean: price band creates losses of $100 mn and risks exports

Entel profits fell $61.7 mn in 2020

Bolivia seeks funding to complete the $20.8 mn El Alto-Yungas highway

Government reports ethanol production fell by 32% in 2020, but YPFB defaulted on purchase target