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January 30, 2017

Articles in This Edition  Export Sales Highlights  France's Hollande Criticizes Protectionism as 'Worst Response'  China to Reduce Marine Fish Catch for Ecological Protection  Weak Exports Curb U.S Fourth-Quarter Economic Growth  Argentine 2016/17 Soy Crop Seen at 53.5 Million Tons - Exchange  Rains Slow Harvest in Brazil's Soybean Belt for 2nd Week  Brazil's 'Car Wash' Prosecutor Says Corruption Probe to Grow

Export Sales Highlights This summary is based on reports from exporters for the period January 13-19, 2017. Soybeans: Net sales of 539,400 MT for 2016/2017 were down 45 percent from the previous week and 10 percent from the prior 4-week average. Increases were reported for China (351,500 MT, including 302,000 MT switched from unknown destinations and decreases of 68,200 MT), Mexico (167,800 MT, including decreases of 21,100 MT), South Korea (156,300 MT, including 103,000 MT switched from unknown destinations), Indonesia (21,700 MT, including decreases of 1,500 MT), and Japan (20,700 MT, including decreases of 100 MT). Reductions were reported for unknown destinations (206,900 MT). For 2017/2018, net sales of 126,000 MT were reported for unknown destinations. Exports of 1,261,500 MT were down 20 percent from the previous week and 22 percent from the prior 4-week average. The primary destinations were China (962,900 MT), South Korea (112,600 MT), Mexico (37,000 MT), Italy (32,900 MT), and Tunisia (29,000 MT).

Optional Origin Sales: For 2016/2017, options were exercised to export 120,000 MT to China from the United States. The current optional origin outstanding balance of 183,000 MT is for China.

Exports for Own Account: The current exports for own account outstanding balance of 52,500 MT is for Canada. Soybean Cake and Meal: Net sales of 276,800 MT for 2016/2017 were up 3 percent from the previous week and 53 percent from the prior 4-week average. Increases were reported for the Philippines (89,700 MT), Pakistan (62,100 MT, including 45,000 MT switched from unknown destinations and decreases of 100 MT), Vietnam (45,000 MT, switched from unknown destinations), Saudi Arabia (43,700 MT, including decreases of 1,300 MT), and Mexico (33,400 MT, including decreases of 100 MT). Reductions were reported for unknown destinations (55,900 MT), Nicaragua (6,000 MT), Guyana (2,500 MT), and Taiwan (1,000 MT). For 2017/2018, net sales of 1

6,100 MT were reported for Nicaragua (6,000 MT) and Canada (100 MT). Exports of 212,900 MT were down 21 percent from the previous week, but up 6 percent from the prior 4-week average. The primary destinations were Pakistan (74,800 MT), Mexico (39,600 MT), Saudi Arabia (30,000 MT), Canada (12,300 MT), and Peru (12,100 MT).

Soybean Oil: Net sales of 49,500 MT for 2016/2017 were up 19 percent from the previous week and up noticeably from the prior 4-week average. Increases were reported for Morocco (18,000 MT), the Dominican Republic (12,600 MT), unknown destinations (10,000 MT), Mexico (3,200 MT), and Colombia (3,200 MT). Exports of 10,100 MT were down 73 percent from the previous week and 66 percent from the prior 4-week average. The primary destinations were Mexico (9,200 MT) and Canada (800 MT).

France's Hollande Criticizes Protectionism as 'Worst Response' SANTIAGO, Jan 21 (Reuters) - France's President Francois Hollande on Saturday criticized protectionism and with his Chilean counterpart said that Europe would look to strengthen ties with Latin America, speaking a day after U.S. President Donald Trump took office.

Hollande said international relations should be guided by multilateralism with a role for the United Nations, contrasting with Trump's calls for tighter borders and an "America First" approach during his first speech as president on Friday.

"Protectionism is the worst response. It is the answer that ultimately impedes trade, hinders growth and even affects employment, including in countries that advocate for and implement it," Hollande said.

On Monday, Hollande responded to Trump's criticism of the European Union by saying the bloc did not need to be told what to do by outsiders.

With Chile's President Michelle Bachelet, Hollande said both countries wanted climate change agreements to be respected and that Chile and the European Union would update their free trade agreement.

"There are ongoing discussions between Europe and Latin America, and we will also look to establish a special relationship with the Pacific Alliance," he said referring to the bloc made up of Chile, Peru, Colombia and Mexico. The Mercosur trade bloc that includes Brazil and Argentina is also seeking a free trade agreement with the European Union.

China to Reduce Marine Fish Catch for Ecological Protection BEIJING, Jan. 21 (Xinhua) -- China plans to reduce its marine fish catch in the next few years to protect the environment.

The ocean fishery output will drop to less than 10 million tonnes by 2020, down by 3.1 million tonnes from 2015, Vice Minister of Agriculture Yu Kangzhen said.

"When setting the target, we have considered the state of resources, fishermen's livelihoods and the sustainability of the fishing industry," Yu said. "To achieve the target, the government will cut down on fishing vessels, examine catches at ports, and act against undersized catches."

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A total of 7.5 billion yuan (1.1 billion U.S. dollars) will be earmarked from the central budget from 2016 to 2020 to subsidize fishermen and encourage them to find jobs in aquaculture and recreational fishing.

In 2020, China will reassess the fishery resources and set further goals to make sure production stays in line with the carrying capacity of the environment, Yu said.

China is the world's largest country in terms of fish catch with the most fishing vessels and fishermen, but overfishing in the past years has substantially depleted its fishery resources.

Aware of the worsening condition, the government has introduced fishing moratoriums and set up protection zones.

China has prolonged its average fishing off season by a month, which bring the minimum time to three months.

Weak Exports Curb U.S Fourth-Quarter Economic Growth By Lucia Mutikani WASHINGTON, Jan 27 (Reuters) - U.S. economic growth slowed more than expected in the fourth quarter as a plunge in shipments of soybeans weighed on exports, but steady consumer spending and rising business investment suggested the economy would continue to expand.

Gross domestic product increased at a 1.9 percent annual rate, the Commerce Department said on Friday in its first estimate of fourth-quarter GDP. That was a sharp deceleration from the 3.5 percent growth pace logged in the third quarter. As a result, the economy grew only 1.6 percent in 2016, the weakest pace since 2011. Growth in the first half of the year was curbed by cheap oil and a strong dollar, which undercut company profits and weighed on business investment.

An inventory correction also hurt growth last year. The economy expanded 2.6 percent in 2015.

In the fourth quarter, exports fell at a 4.3 percent rate, reversing the 10 percent increase notched in the third quarter. The fourth-quarter drop in exports was the biggest since the first quarter of 2015.

Trade sliced off 1.70 percentage points from GDP growth in the fourth quarter after adding 0.85 percentage point in the prior period. That was the biggest drag since the second quarter of 2010. Most of the hit came from soybean exports, which fired up GDP growth in the third quarter after a poor soy harvest in Argentina and Brazil.

Economists polled by Reuters had forecast GDP rising at a 2.2 percent rate in the fourth quarter. With a labor market at or near full employment starting to lift wages and supporting consumer spending, the outlook for the economy is bright. Growth this year could also get a boost from President Donald Trump's pledge to increase infrastructure spending, cut taxes and reduce regulations.

CONSUMER SPENDING JUMPS Although Trump has offered little detail on his economic policy, his promises have been embraced by consumers, businesses and investors. Consumer and business confidence have soared, while the U.S. stock market has rallied to record highs. 3

But uncertainty over the Trump administration's trade policy poses a risk to the economy.

A stronger economy would also mean further interest rate increases from the Federal Reserve. The U.S. central bank has forecast three rate hikes this year. It raised its benchmark overnight interest rate in December by 25 basis points to a range of 0.50 percent to 0.75 percent.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 2.5 percent rate in the fourth quarter. It rose at a 3.0 percent pace in the third quarter.

With domestic demand increasing steadily, businesses continued to restock. They accumulated inventories at a rate of $48.7 billion in the last quarter, up from $7.1 billion in the third quarter. Inventories added 1.0 percentage point to GDP growth, double the contribution in the third quarter.

Business investment shifted into higher gear, with spending on equipment increasing at a 3.1 percent rate after four straight quarterly declines. The gain reflects a surge in gas and oil well drilling, in tandem with rising crude oil prices.

Spending on exploration, wells and shafts increased at a 24.3 percent rate after declining at a 30.0 percent pace in the third quarter. Energy services firm Baker Hughes said last Friday that U.S. energy companies added 29 oil rigs in the week to Jan. 20, bringing the total count to 551 - the most since November 2015.

Investment in nonresidential structures, however, fell at a 5.0 percent pace in the fourth quarter after rising at a 12.0 percent rate in the prior period.

The gains in both consumer and business spending resulted in a measure of private domestic demand rising at a brisk 2.8 percent, up from the 2.4 percent pace notched in the third quarter.

Investment in home building rebounded after two straight quarterly declines, making a modest contribution to growth. Government spending picked up as a rise in state and local government investment offset a decline in federal government expenditures.

Argentine 2016/17 Soy Crop Seen at 53.5 Million Tons - Exchange BUENOS AIRES, Jan 26 (Reuters) - Argentina's 2016/17 soy crop was forecast at 53.5 million tonnes by the Buenos Aires Grains Exchange on Thursday, down from 56 million tonnes in the previous crop year. The forecast, given in the exchange's weekly crop report, was its first harvest estimate of the current season.

Rains Slow Harvest in Brazil's Soybean Belt for 2nd Week By Gustavo Bonato SAO PAULO, Jan 27 (Reuters) - Rains have delayed soybean harvesting in Mato Grosso, Brazil's top grain-producing state, for the second week in a row, reducing deliveries to traders who had contracted for larger volumes.

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Soy collection in Mato Grosso reached 16.3 percent of total planted area by Friday, farmers' statistics body Imea said, well below expectations considering early planting in September and a good harvesting rate in the first days of the year.

"We could have made it to 24.7 percent of the area by now, but the rains did not allow farmers to accelerate their work," Angelo Ozelame, chief analyst at Imea, said.

Last week, the harvest had reached 11.5 percent of the area, while it could have advanced to 15 percent, said Imea, which calculates the potential harvest progress based on the sowing calendar and seed types used by farmers. Mato Grosso is seen producing 30 million tonnes of soybeans in the 2016/17 season, contributing to a record Brazilian output of 103.8 million tonnes.

Large soybean traders which booked cargoes for delivery in January, traditionally the first month of the harvest, are facing temporary logistical hurdles.

"Companies are a bit jumbled, because they bought beans for January delivery. Those beans are coming in at the last minute," said a regional executive at a trading house in Primavera do Leste, southern Mato Grosso, who asked not to be named.

He said delays may force companies to pay fees if delivery deals are not fulfilled at ports. If the delays are excessively long, farmers may also be penalized.

BEAN QUALITY Farmers fear that prolonged wet weather may not only slow down harvesting but also affect quality, as excessive humidity spoils beans which are ready to be picked.

"A cold front over the coast channels humidity from the Amazon region to Brazil's center-west, causing rains in Mato Grosso and other states," said local forecaster Somar Meteorologia.

However, there are no reports of damage to the crop yet.

"Weather was a problem this week, but not to the point of causing losses. Many farmers managed to proceed with harvesting in brief windows of dry weather," Fabio Meneghin, an analyst touring the region for analysts Agroconsult, said.

In Paraná state, Brazil's second-largest soybean producer, harvest has just started, according to the local government.

Brazil's 'Car Wash' Prosecutor Says Corruption Probe to Grow 27-Jan-2017 CURITIBA, Brazil – (Associated Pres) The lead federal prosecutor in a massive corruption investigation roiling Brazil says that recent developments could double the size of the case, a staggering possibility given that the probe has ensnared many of the country's elite, threatens to bring down President and is expanding to other Latin American countries.

Nearly three years after the first arrests in March 2014, the so-called Car Wash investigation has no end in sight, said , co-ordinator of the task force in the state of Parana, where the operations began and are still largely centred under the jurisdiction of Judge Sergio Moro. 5

"I would say that the new plea agreements could allow the Car Wash operation to double its size in the future," Dallagnol told The Associated Press on Thursday, declining to go into detail because the cases were ongoing.

What started as an investigation into money-laundering has morphed into a corruption scandal so large that it has shocked Brazilians long accustomed to graft in politics. Investigators say more than $2 billion in bribes were paid out in a kickback scheme that was centred at state oil company and included major construction companies like Odebrecht. In the last few years, dozens of politicians and top businessmen have been convicted and jailed, and many more are facing charges.

In a wide-ranging interview, Dallagnol said the investigation "lives at risk" because of forces trying to snuff it out. He said the pressures were increasing as the number "of powerful people caught up in it grows by the day."

Dallagnol said the loss of Supreme Court Justice , who was overseeing a large part of the investigation and died in a plane crash last week, was a huge blow but ultimately would not derail the many cases in progress.

He said that while many believed the investigation was creating a "new Brazil," its long-term impact depended on whether Latin America's largest nation took measures to reform its political and judicial systems. He likened it to an ill patient who goes to the doctor and gets a diagnosis but doesn't act on the medical advice.

"Unfortunately, we are still at the diagnostic stage," said Dallagnol, who studied law in Brazil and then did a master's degree at Harvard University.

Dallagnol said the Car Wash investigation was succeeding thanks to a four-pronged strategy: plea bargains that lead to new revelations, operational "phases" that build on each other, close co- operation between justice and legal officials, and a transparent communication strategy that includes divulging details of cases once arrests are made.

Dallagnol also praised Moro, the judge, saying his vast knowledge of laws related to corruption and ability to succinctly apply the law were key factors.

To many Brazilians, fed up with corruption and their political leaders, Moro and Dallagnol are heroes, a designation that Dallagnol flatly rejects.

"We are just doing our jobs," he said.

The investigation has become so large that it is expanding to other states and judges. The arrest warrant issued Thursday in Rio for Eike Batista, previously one of the world's richest men now wanted for allegedly making bribes, is a testament to how far the Car Wash investigation and its offshoots have gone.

Last year, prosecutors reached a plea agreement with dozens of executives of constructor Odebrecht. The agreements, expected to be made public early this year, are believed to have

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damning evidence of bribes against top politicians in Brazil and possibly in other Latin American countries, including Argentina, Peru and Venezuela.

Temer, who has been fingered in other plea bargains but never charged, could be removed by the electoral court if Odebrecht plea bargains detail illegal campaign financing that he has long been accused of accepting. Temer has denied wrongdoing.

Dallagnol brushed off criticism of the tactics used during the investigation, which have included building cases based in part on plea bargains, wire taps and making accusatory statements about defendants who have not been convicted.

While detailing money laundering and corruption charges against former President Luiz Inacio Lula da Silva in September, Dallagnol called Silva the "the maximum commander of the corruption scheme identified as Car Wash."

Supporters of Silva and his Workers' Party immediately accused Dallagnol of playing politics since Silva had yet to even stand trial. Silva, president between 2003 and 2010, has expressed interest in running for the presidency in 2018 and leads in preference polls.

Dallagnol defended the designation, saying it was based on all the cases against Silva, not just the charges being presented that day. Dallagnol noted that only two of the five cases against Silva are in his jurisdiction.

"In Car Wash, I've learned that politicians are never corrupt," Dallagnol deadpanned. "They are always persecuted."

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