Argentine voters soundly rejected President Mauricio Macri’s austere economic policies in primary elections on Sunday 11/08/19, casting serious doubt on his chances of re-election in October.

A coalition backing opposition candidate Alberto Fernandez (Center-left) – whose running mate is former president Cristina Kirchner – led by a wider-than-expected 15 percentage points with 47.3% of votes, with 88% of ballots counted. Pro-business Macri registered 32% of the votes and centrist former finance minister Roberto Lavagna a distant third with just 8.3%.

If Fernandez was to register the same result in October, he would be president as Argentina’s electoral law requires a candidate to gain 45% for outright victory, or 40% and a lead of at least 10 points over the nearest challenger.

Macri’s chances to get a second mandate appear all but over. His camp has lost popularity due to a deep economic crisis which drove the inflation rate to nearly 50% last year and slashed Argentines’ purchasing power. He was taking the necessary, painful steps to get the economy going after 12 years of leftist populism under Cristina Kirchner and her predecessor and late husband, Nestor Kirchner but the electorate issued a resounding rejection of his handling of the economic situation.

On the other side, the markets have little faith in Alberto Fernandez, who is widely seen as dependent on Cristina Kirchner. The possibility that Cristina Kirchner could return to power put markets on edge due to the prospect of heavy state interventionism and protectionism. On top of that, Mrs Kirchner is currently still facing a series of trials for corruption (a dozen) during her 2007-2015 administration. She denies all the allegations.

There could be an even stronger degree of market volatility given the spread in the results. At market opening on 12/08/19, The Argentine peso plunged already by 5.1% to 48.50 per US dollar … it could turn into a hectic trading day for Argentina.

To be followed:  The 1^st round of the presidential election will be held on October 27, with a run-off set for November 24, if needed.

Situation/weather: Weather conditions improved in the north since February after having faced a very wet January. Cumulative rainfall for July – April was 1,596 mm, +24% compared with the historical average for the same period due to excess rainfalls registered from November to January this year (1,012 mm in 3 months).

Silage and pasture program: 208 ha of OAT and 145 ha of Ray-grass have been sowed instead of corn and are developing well. Ray-grass and OAT have both a high protein content to feed cattle and support high loads of animals per hectare. In addition, OAT is also cleaning the soil and improving its structure.

The heavy rainfalls which occurred previously favoured pasture development which were dry after past cycle (last year, the region suffered until April from an intense drought).

Cattle operation: Our cattle herd (5,595 heads currently) is in excellent shape and taking advantage of pastures densification. You can see below some of our categories.

Heifers 1 year old

Female Calves

Pregnant Heifers (1^st pregnancy)

Pregnant Cows

Cattle sales took also benefit from better prices:  Prices were up in 2019 as beef exports raise. According to the latest report from the under-secretary of livestock, beef production is down by 4.6% in comparison to 2018 while exports are climbing by 33% – of which China represents 67% of the exports in the 1^st quarter of 2019 while it was 56% in 2018.

As a direct consequence, cattle prices were up between 67 and 74% (in AR$) since April 2018, and above inflation (55%).

Former Argentine president Cristina Fernandez de Kirchner has announced on Saturday 18^th May she will stand as a vice-presidential candidate in national elections later this year. A surprise move as she was widely expected to be the main challenger to President Mauricio Macri. She was perceived as the biggest threat to Mr Macri, although many remain wary of turning back to the leftist who brought in currency controls and raised taxes on farm exports when she was president.

The leading person on the ticket is Alberto Fernandez, who was chief staff in the government of Kirchner’s late husband and predecessor, Nestor Kirchner. Mr Fernandez retained the office for part of Cristina Kirchner’s first term but he left the post after a steep economic crisis took hold. He was then expressing strong critics against her. He is considered a moderate within the broad Peronist political flank.

Mrs Kirchner decision to pursue the position of second-in-command reflects possible doubts over whether she is best positioned to challenge Macri directly in light of a series of looming corruption trials. 

Mrs Kirchner has been accused of taking bribes in exchange for public work contracts, but she denies. In separate cases, she faces several formal investigations into allegations of bribery, money laundering and criminal association during her administration and that of her husband. The list goes on and on. 

The news astonished some within her own Peronist movement: Former president, Eduardo Duhalde, said he thought it was “a joke” when he first heard.

“Article from Reuters, dated 18/05/19”

Situation/weather: After having faced a very wet period from November to January (2 times more than the historical average for those months-502 mm), the situation was normalised in February and in March.

Forestry activity: Our 750 hectares (ha) forest is planted by 580 ha of trees: we have around 145 ha of eucalyptus, 427 ha of pine trees and 6 ha of grevillea. Minor cuts are forecasted this year given the maturity of the trees. However and until cutes occur, the forest has maintenance and cleaning requirements. Internal maintenance as well as the section bordering roads have been cleaned to prevent from fire have been performed.

Situation/weather: After having faced a very wet January with 290 mm (2 times more than the historical average for the month – please refer to the post made in January), the situation was normalised in February and in March. The level of Santa Lucia River which is bordering the farm went down and soils are drying.

Silage and pasture program: Pastures will improve their density and we will have adequate soil moisture to plant pastures (OAT & Ray-grass) as we could not sow silage corn in November. 208 ha of OAT and 145 ha of Ray-grass are going to be sowed last week of March on the surface originally prepared for corn.

Ray-grass and OAT have both a high protein content to feed cattle and support high loads of animals per hectare. In addition, OAT is also cleaning the soil and improving its structure.

Cattle operation: Our cattle herd (5,839 heads currently) is overall in good shape and taking advantage of pastures densification. We are also starting to sell 400 calves (young steers with 220 kg) to take advantage of increase in market prices. Young female calves are retained to increase and replace mothers’ herd.

In addition, self produced Bradford bulls will also improve internal genetic of the herd while old bulls are going to be sold.

After having faced an intense drought last year at the same period, we are now in the opposite situation: Northeast Argentina and the adjacent parts of Paraguay, Uruguay and Brazil have been hit by extensive flooding.

Since the beginning of the year, the area has received about 5 times the long-term expected average rainfall. You can see in previous posts that we had to defer several times sowing of crops due to heavy and frequent rains. Rains have hit wheat harvesting as well as soybean, corn and rice plantations.

“Article from La Nacion, dated 09/01/19”

For us, the situation is the most pronounced in Corrientes and in Salta provinces where we have Tata Cua forest and Curupi Pora farm, and San Bartolo farm respectively. 

While in some part of Corrientes province water is nearly 2 meters deep and displacing the herds of cattle, we have been more preserved so far. We register 424 mm in December vs 190 mm historical average for the month and 247 mm from 01/01 to 13/01/19. As a consequence, we could not sow corn and we will replace this sowing by pasture (ray grass & oat) in March. Stocks of silage are already at low level given the past drought and the current situation may emphasis the situation if we can not sow pasture to feed the herd. To this end, we are already taking some preventing measures for the cattle in Curupi Pora farm (over 5,900 heads) if the situation was to continue and some incidence in the production can be anticipated too.

“Article from Corrientes Tourist office, dated 09/01/19”

At San Bartolo where the climate should be currently hot and dry, we have some plots close to river flooded (excess water coming from the north) and emphasis by unusual rainfalls (from July to December, we have registered +157% compared with the historical average for the same period – only for the 2^nd week of January, we register 105 mm of rains).

Given the situation, we are enhancing sanitary controls of the cattle and taking several preventing measures (over 3,000 heads there). However, we are anticipating some negative effects on meat production as well as for the pregnancy ratio.

Following the G-20 summit held in Buenos Aires, Presidents Macri and Xi Jinping announced during a state visit more than 30 agriculture and investment deals. The deals include an agreement to export Argentine cherries to China and an expansion of a currency swap.

China is among Argentina’s top export markets, especially for agricultural commodities that are the engine of its economy. It is also one of Argentina’s biggest lenders, financing about $18.2 billion in infrastructure and other projects.

At the same time, Argentina is on the verge of signing a deal with the United States that would allow two-way trade of fresh beef for the first time in nearly two decades.

The agreement would simultaneously open beef imports to both countries. The deal would also open a new market for the U.S. cattle sector, although demand for U.S. beef is low in Argentina.

Argentina will have a 20,000 tons limit on its exports to the United States while there will be no limit on U.S. beef going to Argentina. Argentina is seeking to boost beef sales abroad and the agreement would allow Argentina to show other prospective buyers that its meat is healthy enough to enter a country with some of the world’s toughest sanitary protocols.

Argentina fell off the top 10 list of beef exporters during 8 years thanks to the anti-farm policies of the previous Kirchner administration. The country is back in the top 10, according to USDA data and could get into the top 5 next year thanks to the free-market policies of President Macri and a sharp weakening of the local peso currency this year.

The United States produced 11.9 million tons of beef last year and exported 1.3 million tons, according to USDA data. Argentina produced 2.8 million tons of beef and veal in 2017, exceeding its domestic consumption by 293,000 tons in 2017.

For now, those deals took place at the state levels but it supports a business friendly environment and attractiveness for investors. Meanwhile a strong agriculture recovery will help to end recession.

Situation/weather: As of end of October, cumulative rainfall for the cycle was 232 mm or -31% compared with the historical average for the same period. October was a very dry month as we registered only 1/3 of the average rainfall with 59 mm of water. As a result, grasslands are starting to suffer from lack of rain reducing pasture available to feed the herd, knowing that we are already recovering from the intense drought we faced earlier this year.

Cattle operation (5,534 heads): We will soon begin with the insemination process of the heifers. Between spring and autumn, we should have over 2,400 heifers in service. Then, Young female calves are retained to increase and replace mothers’ herd.

Silage and pasture program: Given the dry soil condition and the lack of good sowing contractors available (a lot of service providers stopped their activities in the region, which is not core for crops, given costs inflation they face and related economic outlooks), we decided not to sow some subtropical pastures planned (Avena and Bracchiria) and rather focus on corn. 155 ha of corn are going to be sowed by year-end for self-consumption. Depending on soil conditions, Ray grass pastures are also going to be sowed during the 1^st part of 2019 (high protein content to feed cattle and it supports high loads of animals per hectare).