May 27, 2019

Total exports of forestry products in 2018 will reach US$2.25 billion – 33% more than in 2017 – setting a new record for the sector, which for the first time – and by a good margin – is at the top of the ranking and displaces another key driver of the national economy: meat.

Considering what was exported in the first nine months and the trends in prices and volumes, by the end of 2018 the forestry sector as a whole will have exported the indicated amount, according to the study Recent evolution and prospects of foreign trade of forestry products, prepared by Darío Fuletti and Cecilia Petraglia, technicians of the Office of Programming and Agricultural Policy (Opypa) of the Ministry of Livestock, Agriculture and Fisheries (MGAP).

The Opypa 2018 Yearbook states that these US$ 2.25 billion are a pillar in the total of US$ 6.915 billion that they estimate will be obtained in 2018 from agro-industrial exports (which slightly exceed the US$ 6.908 billion of 2017 and are also a record, supported mainly by the progress of the forestry and meat sectors).

Pedro Soust, Director General of Forestry at the Ministry of Livestock, Agriculture and Fisheries (MGAP), told El Observador that he is not particularly concerned about the sector’s ranking compared to others in the country. «The most important thing is this association, which consolidates an organized, calm, responsible, and respectful sector—an exemplary forestry sector.»

With that concept, the official alluded to the presentation of the 2018/2019 Fire Protection Plan, in which actions undertaken jointly by actors from the public and private sectors were disseminated, aimed at promoting the prevention of forest fires and, if necessary, being more efficient in fighting them.

Soust said he sees the sector as «very strong and calm,» in a year that «is ending very well,» with exports that «have gone smoothly, according to plan.»

After emphasizing that the forestry business «is long-term, slow-developing but with sustained growth,» he expressed satisfaction at seeing «more consolidated markets» and companies that are «more relaxed, comfortable, and very strong.»

The forestry director of the Ministry of Livestock, Agriculture and Fisheries (MGAP), when asked about trends indicating that the positive figures of 2018 would be repeated in 2019, responded that they are expecting a very optimistic year. «There may be unforeseen circumstances, but what is planned and expected is very similar to what we have had this year, which was a year of growth,» he added.

First on the podium and with light

The Opypa report states that of the US$2.25 billion exported by the sector, cellulose pulp represented 77% -US$1.739 billion- and ranked first in exports of agricultural products.

In second place were exports from the meat sector, with an estimated US$1.945 billion (and within that, a major impact from beef, with US$1.618 billion).

Based on data from Opypa, the income from exports of agricultural products such as soybeans, seriously affected by the drought that occurred at the beginning of 2018 and which noticeably reduced production, was left far behind and in a third tier.

The international context is very favorable for the sector, with high prices for both pulp and solid wood. Pulp prices are at record levels. Long-fiber pulp in Europe—the sector’s main price benchmark—reached US$1,230 per ton in September 2018. In China, the main pulp market (accounting for 35% of global demand), pulp reached US$875 per ton. These values ​​were reflected in regional export prices. In Uruguay, prices rose by around 35% for both types of pulp.

With both plants—UPM and Montes del Plata—operating at full capacity, pulp export volumes remained stable in 2018. However, export prices showed a significant increase, resulting in a 34% year-on-year rise in exports during the first nine months of the year (31% estimated for all of 2018 compared to 2017). China, the Netherlands, and Italy, in that order, were the main markets considering the last year with complete data.

Second on the list is the export of pine logs. Annual shipments are estimated to reach US$162 million, according to official figures. In an average month over the past year and a half, shipments averaged around 175,000 tons per month at an average price of US$80 per ton. Virtually all of these sales are destined for China. In this case, an 83% increase in foreign exchange earnings is estimated when comparing 2018 to 2017.

Eucalyptus chip exports are expected to reach US$96 million this year, 53% more than last year. Since 2015, Portugal has been the almost exclusive destination for this product.

It is estimated that total export revenues from the forestry sector will grow by 1% in 2019, reaching US$2.278 billion. At the beginning of this decade, exports totaled US$1.233 billion.

HE SAID IT

«The most important thing is this association that consolidates an organized, calm, responsible and respectful sector, an exemplary forestry sector.»

Pedro Soust

Head of the General Forestry Directorate of the MGAP

What came in

In 2018, imports of forestry products are projected to grow for the second consecutive year, according to estimates from Opypa, totaling US$188 million (+8.8%). The main import category will be paper and paper products, totaling US$153 million (+5.6%). As for solid wood products, the most significant will be boards, at US$27 million (+24.2% compared to 2017). Meanwhile, imports of sawn timber are expected to reach almost US$6 million (+22.1%), according to official projections.

Juan Samuelle twitter.com/juansamuelle

Source: El Observador