Situation/Weather: The farm is in very good shape and has recovered from the previous drought period. However, pastures are less dense as they should be for the period due to lack of water previously recorded. Soil will need time to recover from the intense drought the region faced earlier.
Cattle: We have around 5,000 heads at the farm, in good body condition as you can see below in the various categories.
The herd was relatively resilient given the high heat recorded previously (mortality rate 0.6%). The most sensitive categories were supplemented, which obliged us to buy back fodder and pellets, whose prices are rising. We proceed to an early weaning so that mothers can recover before winter service. The annual production objective will not be met due to the impact of the drought on the cycle. However, we are registering good sale performance as market prices are at their peak. 480 Calves (male/female) will be sold in the coming weeks.
Argentines face the prospect of 90% inflation by year end after the brutal resignation on 02/07/22 of is economy ministers. The dramatic exit of Martín Guzmán this month led to price mark-ups by many businesses. Some Argentines raced to the shops the morning after Guzmán quit, to try to stock up ahead of peso devaluation and price hikes. The Central Bank comes under pressure to let the peso depreciate more rapidly.
Consulting firms in Buenos Aires, such as EconViews, FMyA, Alberdi Partners and EcoGo, are now predicting 2022 year-end inflation of 90%. That would be the fastest pace since hyperinflation three decades ago, and the highest rate in the world outside Venezuela and Sudan, according to forecasts from the IMF. Farmers are also hanging on to more of their crops than normal to defend against inflation. Growers have long used hoarding to shield against Argentina’s notoriously volatile economy, especially gyrations in currency and export taxes. But this year, spiraling inflation is exacerbating the dynamic (less than 45% of the global soy harvest has been sold).
More hoarding signals slower shipments of soy oil and soy meal at a time when food supply chains are already heavily disrupted by the lingering impact of the pandemic and the war in Ukraine. It also curtails hard currency flows to Argentina which exacerbate his debt problem. It’s a very volatile situation.
Among our assets, we have a forest of 750 ha called Tata Cua composed of pine, eucalyptus and grevillea trees. Fires in the region have again caused severe damage by burning more than 20,000 ha per day, destroying plantations (rice, corn, soybeans, pastures) during the peak period of the drought registered earlier this year. Given the risk of fire, many forest owners preferred to carry out cuts in advance. On our side, we have been looking unsuccessfully for operators to evacuate our death wood affected by fire in 2020.
Internal maintenance as well as the section bordering roads have been cleaned to prevent from fire or else have been performed.
Our options are limited given the damages caused by the fire and the current gasoil shortage which reduces our internal actions.
Argentina is grappling with shortages of diesel fuel that powers tractors and trucks just as the soybean and corn harvests pick up in the powerhouse crop exporter (see article from LaNacion dated 16/05/22).
Farmers ready for fieldwork and truckers who drive the crops to port are reporting rationing and soaring prices across the Pampas growing belt and in the northern regions. Autumn is a time of busy truck traffic, which is the main means of transporting grains in Argentina to the ports around Rosario, the country’s main farming port hub on the banks of the Paraná River (around 86% of soybean transportation to Argentina’s ports is carried out by trucks, 13% by trains and the remaining 1% by ships). Argentina is the world’s biggest exporter of soy meal and soy oil and the 3rd biggest corn supplier in the world. Last year, the combined exports of those products generated over USD 30 billion.
Many farming activities depending on diesel use are affected and you can see below the “Gasoil supply map” created by Argentine transport association (FADEEAC) which aims to monitor in real time the availability of fuel in Argentina.
The big problem which is creating this shortage is the local prices of diesel. They are too low compared to imported products. If it’s imported as it is mostly the case, there is a big loss. Diesel production within Argentina rose only 1.5% on the year in January 2022. Refiners said they have stepped up imports despite rising global prices and sell locally at government-controlled prices nearly a third less. Finding diesel cargoes are not easy either, with Europe pulling the marginal distillate barrel instead of Latin America (see article from El Litoral dated 20/05/22).
Most countries in Latin America are very worried about the diesel supply chain. Demand for refined products has also increased drastically in Brazil but refineries aren’t able to satisfy those demands to. In our case, we have filled our tanks at San Bartolo and at Curupi Pora farms (2,000 liters each) and we are trying to stock as much as possible diesel via jerry cans. For now, our usual suppliers can only deliver 200 liters – so we are diversifying suppliers but prices are going up. On average, we need 2,000 liters per month for those 2 farms. We hope that the situation is going to reveres otherwise; we would need to reduce machinery activities.
Situation/weather: Rains are back but remain still below the historical average for the season. Cumulative rainfall for July-April were 38% below the normal level. Stronger rains are forecasted in July. Winter period should also be warmer than usually. Short term, rainfall helped the regrowth of the pasture which were lacking. Soil will need time to recover from the intense drought the region faced earlier.
Cattle operation: We have around 6,000 heads at the farm, in fantastic shape as you can see. We are currently testing pregnancy of heifers previously inseminated. So far, we have registered around 2,000 births.
In terms of beef production, we reached 53% of the annual objective by end of April with 325 tons of production. Given the drought and all its implications, we will not be able to reach our annual beef production objective of 620 tons. However, we could maintain a high pregnancy ratio and a great shape of the herd which is essential to generate future incomes.
As previously mentioned, we are in the peak season of cattle sales. During May, we are going to sell 220 female calves and 260 calves. Market prices are at their peak (they could be higher if quotas were lifted). After 2 complicated years for the sector, economical results are improving and again profitable, the, although uncertainty persists due to the strong volatility and high prices of grains. Meanwhile, breeders highlighted the good wintering prices and the importance of beef exports to China.