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PARAGUAY – Update on Salitre Cue farm activites (April 2022).

Weather: After having faced the worst extended “extreme drought” in 50 years, we faced torrential rains… from one extreme to the other as you can see.

The good news is that the level of the river Tebicuary rose significantly and that we are again authorized to pump water. It is key for us as we need almost 3 months to fulfil our artificial lake of 480 ha. Given the extreme drought faced earlier, a commission of the Congress has been mandate to evaluate the incidence of farming activates on the flow and water level of rivers. Likely, we have to anticipate more regulation which will force all crops producers to raise their environmental standards. However, we hope that those measures will remain pragmatic.

Soybean: Among the 1,100 sowed, 350 ha have been harvested with a yield of 0.4 t/ha. Further 300 ha have to be abandoned as they have been burned. This is a direct consequence of the drought. As for the 400 ha remaining, our expectations are low given the strong storms and flood registered in the farm.

Our case is by far not isolated: at this stage of the harvest, national soybean yields are around 1.1t/ha with regions like ours where the average yields is between 300 and 500 kg/ha (see Article from APS dated 01/03/22). The positive news is that soybean price quote above $640/t.

PARAGUAY – Update on Salitre Cue farm activites (March 2022).

Weather: Even if we are still facing very hot days, we have finally registered some rains. According to the latest weather forecast for March and April, more normalize conditions could begin but rainfalls will remain below normal parameters. The rice season is entering in is commercial stage and soon we will begin with the soybean harvest.

Rice: So far, we have harvested around 350 ha among our 560 ha sowed. Yield have improved in the latest plots sowed; we are now with a 6.6 t/ha yield (dry) with a very high quality for the latest block harvest (all above a purity index of 58).

We are pleased with those results as we were expecting lower yields as the plots suffered from water shortage due to the extreme drought we faced. However, the grains reached their physiological maturity as their humidity level is around 26%. Correct timing at harvest is essential to avoid losses incurred by harvesting too soon or too late. Immature grains harvested too early result in a high percentage of broken and low milling recovery, while if harvesting is delayed; the crop is exposed to insects, rodents and birds, in addition to the risks of lodging and shattering.

Local rice prices remain also attractive as market prices are above $240/t for standard quality (+14% above budgeted price). It is a small consolation because we were able to sow only 35% of our 1,638 ha rice area given the drought forecast. Price effect will not compensate for volume losses.

Soybean: By end of March, we are going to start the harvest of our 1,100 sowed. Around 300 ha have been affected by the drought and reduced our overall yield forecast from 2.5 t/ha to 1.5 t/ha. However, soybean price have recently boomed (>$600/t Vs $350/t budgeted) due to the Ukrainian situation and the impact of drought on the crop in South America. Price effect here compensates yield losses.

According to the country’s Ministry of Agriculture, Paraguay soybean processing production has decreased by almost 50% compared to the previous harvest cycle. The Paraguayan Chamber of Oilseeds and Cereals processors (Cappro) estimates that total production will decrease by 60% this year because of the lack of rain.

PARAGUAY – Rice harvest has begun at Salitre Cue farm (February 2022).

Weather: The Situation remains unchanged as our region is still facing “extreme drought” conditions. No rain occurred since a while and we are registering high-temperature peaks.

Rice: On 25/01/22, we began to harvest our 1st block. So far, we have harvested 26 ha and got a preliminary yield of 5.7 t/ha with an index quality of 58 entire grain. Given our past year experience with similar conditions, we got a better yield and a much better quality in those plots than last harvest.

Water stress recorded over the past months affected the grain development in its blooming stage (unfilled grains) in some plots. We tried to manage water needs the best way we could and provide as much as possible water to each plots according to its irrigation stage with our artificial lake as the river was dry but our reserve could not always cover all optimal needs for the entire sowed area.

You can see below the difference of an optimal field we have and another affected by water stress. Meanwhile, we continue with the harvest of our other blocks as humidity of grains is going down very quickly given the heat weave faced, and we are expecting various yield deviation from the plan so as quality depending the plots/blocks.

Soybean: 250 ha of soy have been damaged by the extremely hot and dry weather. As you can see lots of flowers and grains in this area could not finish their normal development. Lost in yields have to be anticipated and we estimated an average yield of 1t/ha for this area versus 2.5t/ha projected.

Our situation is not unique as Paraguay’s Agriculture Ministry has just announced a 40% drop in soybean harvest this season for the country due to the unprecedented weather conditions. In some Paraguayan towns, some producers have already reported losses of 70% to 100% in some batches.

In addition to the agricultural performance, other considerations need to address the logistics situation. Most exports are shipped through the Paraná River, which suffered for the past 2 years from the worst downspout in the last 77 years.

The Paraná river is part of a significant trade circuit for several South American countries— namely Argentina, Paraguay, Brazil, Uruguay, and Bolivia. Many grain-bearing trade ships have had no other choice than to lower their carrying capacities to prevent interference from the increasingly shallow riverbed. This has raised significantly transportation prices and delivery delays.

PARAGUAY – Update on Salitre Cue farm activities (January 2022).

Weather/Situation: Our region is in “extreme drought” situation so as in southern Brazil or southern Mato Grosso do Sul and northern Argentina. Most part of the La Plata Basin suffers from heat waves and absolutely no rain as you can see on the satellite imagery.

The hydric deficit and above-average temperatures have already significantly damaged the 2021/22 soybean crop in the above mentioned area in Brazil.

Our river (a tributary to the Paraná River) where we use to pump water for our rice operation is almost dry.

Rice: The 560 ha sowed with rice are still under irrigation and we are forced to use our water reserve from our artificial lake to get those fields irrigated. As we sowed the fields in stages, the first 160 ha are going to be harvested by the end of this month. For now, we are able to maintain continuous flooding in the plots with the reserve water contained in our artificial lake but the high temperatures cause water to evaporate at a much faster rate.

Soybean: Among the 1,100 ha sowed, 150 ha of soy have been damaged by the extremely hot and dry weather. This stress scenario occurred in the middle of the flowering period; lots of flowers and grains in this area could not finish their normal development. Lost in yields have to be anticipated and we estimated an average yield of 1t/ha for this area versus 2.5t/ha projected.

 

PARAGUAY – Update on Salitre Cue farm activities (December 2021).

Weather/Situation: La Niña conditions are back and may lasting until spring 2022. No rain has been recorded yet this month and is planned for now. You can see on the below map dated 05/12/21, the drought situation faced. Our region is classified in “extreme drought” situation so as most part of the La Plata Basin.

The river Tebicuary, a tributary to the Paraná River, is at a low level as you can see on the picture, and it’s currently impossible to pump water directly from there.

Rice: The 560 ha sowed with rice are currently under irrigation and we are forced to use our water reserve from our artificial lake to get those fields irrigated. Normally, we should have enough water in our artifial lake to irrigate 60 days more all the plots. It’s key to have continuous flooding of water as it provides the best growth environment for rice.

Soybean: 1,100 ha have been sowed as planned successfully. The crop is developing very well so far as you can see. Soybean diversification helps us to mitigate our previous exposition to the sole cultivation of rice. Outlooks for this crop are very positive as in opposite to rice whose ultimate sole market is human consumption.

Corn: We were trying to close some third party leasing contract to develop this crop. Unfortunately, we could not close any lease agreement as the operator interested in our surface could not provided sufficient guarantee to operate properly the lease surface neither to have sufficient inputs available to show the wishes surface. As this option was explored for 1-year, we decided not to move forward. And preserve the quality of our land.

PARAGUAY – Update on Salitre Cue farm activities (November 2021).

Weather/Situation: Although the weather forecast remains very worrying for the season (see weather map below), we are for the moment very lucky because we have recently recorded good abundant rains as you can see.

Those rains help us a lot as the level of the river recovered and we can again pump water directly from there to irrigate rice without using our water reserve in our artificial lake (back up in case of water stress period). We hope that these conditions will be maintained during the coming months (blooming stage when grains are filled).

Soybean: Over 800 ha have been sowed so far and are nicely developing as you can see. We are maintaining our forecast to sow 1,100 ha.

Rice: We have completed the sowing of 560 ha.  The 1st plots sowed are developing well so far. We are at 1st stage and will start beginning of December with 2nd stage when the plants are large enough to withstand shallow flooding. The full irrigation cycle of the crops takes 90 days and it’s important to mention that continuous flooding of water provides the best growth environment for rice.

We are not going to sow rice in block G (450 ha) given weather uncertainties and the extreme low level in the Paraguay River has heavily delayed the supply in all inputs. As a consequence, it is s to risky to start sowing rice in this block. We will stay with 560 ha of rice for this season.

Corn: As previously mentioned and rather than increasing the potential soybean area by reallocating rice surface to soybean, we have enter in negotiation with a third party for the lease of our available surface (up to 1,000 ha) to cultivate corn. This will be a 1-year scenario; weather situation implies us to be pragmatic. The outlook for corn is attractive and it will allow us to diversify our risk/mix.

PARAGUAY – Update on Salitre Cue farm activities (October 2021).

Weather/Situation: Despite the recent rains recorded, the level of the Paraguay River remains at an extremely low level continuing to greatly disrupt traffic on the river. According to the Paraguayan meteorological and hydrological authorities, the situation is far from being reversed in the short term and the river still continues to drop by an average of 2 to 3 cm per day, despite the recent rainfall. This situation disrupts not only the supplies of the agricultural operators (see previous posts) but also their operations. On top, disruption in supply and increasing prices of oil do not help either.

In our case, we are currently luckier as the recent rains enable to raise the level of the river enough to restart pumping directly to the fields as you can see. Our artificial lake which serves as water reserve in dry period is also fulfilled to its limit. We registered the heaviest rains in the country.

Rice: 160 ha of rice have been yet sowed. Due to rains, we had to stop but we are now restarting sowing in block F. You can see below the crop emerging on the surface already sowed. Last week of October, we will start to irrigate the block during 90 days.

In block G (450 ha) , we are going to apply herbicide to control weeds  Subject to weather forecasts and water availability in the river for direct pumping, we will see in November with our partner GPSA if we are going to sow rice in this area. Under this scenario, we are going to sow 1,000 ha of rice this year. Otherwise, the herbicide applied will help to maintain the land clean and we will 560 ha of rice cultivation this year.

Soybean: We have started to sow soybean in block D and we currently maintain our forecasts to plant 1,100 ha with this crops.

You can see below some drainage channels build for the crop. Soybeans need good drainage for increased yield.

Corn: Rather than increasing the potential soybean area by reallocating rice surface in block E, D and F to soybean, we are analysis the opportunity with our partner to sow there corn in December given to good outlook for this crops and to diversify our risk/mix. We have under review the possibility to allocate 560 ha to this cultivation.

The climate requires us to be pragmatic with some kind of flexibility. Subject to weather conditions, we would be able this year to sow above 2,500 ha with 3 various crops (rice, soybean and corn).

PARAGUAY – Sowing season has started at Salitre Cue farm (24/09/21)

Sowing: On September 24, we began to slowly sow rice in block F as we didn’t have optimal soil conditions before (muddy ground). As the season is expected to be very dry, we are only planning for now to sow 560 ha of rice – subject to weather conditions, we will see later with our partner GPSA if we could add block G (450 ha more).

Once rice sowing will be completed, we will start to sow soybean. 1,100 ha have been developed and will be sowed with soybean for the 1st time in October. Here also – subject to weather conditions, we will see with our partner GPSA if we could reallocate 460 ha of rice surface to soybean. Our options depend on weather conditions (rains) and whether or not we will be able to put water from the river or not.

Sowing period started later this year as all producers have to face extra delays in the delivery of their inputs and seeds by barge as the traffic on the Parana River is very slow because of the shallow draft (see previous post). In addition, increases in fuel and fertilizer over the past year will have a strong impact on production costs.

In the US for example, the rice planted area will significantly decrease this year due to the poor gross margin of the activity. Meanwhile some Asian producers like Vietnam, which have recorded better yields than expected, are currently facing disruption due to container shortages and pandemic-led restrictions. We are expecting another complicated season, mainly due to weather.

PARAGUAY – Paraná river at historic low (September 2021).

The Paraná, with the world’s 10th largest river basin, has dropped to its lowest levels since 1940. Experts doubt whether it will recover the exuberance which made it the main thoroughfare of Mercosur integration, even after the rainy season in December.

The decrease in recent months has become so drastic that it is affecting merchant shipping, the generation of hydro-electric power, fisheries and the supply of water for household consumption and irrigation while modifying its geographical relief, water and river-bed in ways which nobody dares to venture will be permanent. Some 4,000 barges, 350 tugboats and 100 container carriers are waiting for the river level to rise, causing significant cost overruns for the transport of fuel, fertilizer, food and other imported goods. Around 85% of Paraguay’s foreign trade is conducted via the river.

As our farm is situated along the river Tebicuary (a tributary to the Paraná River), the situation is even worse in terms of water availability, and our business is highly depended on water (water pumped from the river should be kept standing in the rice field throughout the growth period).  Given the high probability of a coming strong drought, we decided to reduce our rice sowing plan to around 600 ha (vs 1,750 ha). However, we will complete our mix by sowing 1,100 ha of soybean with corn as double crops. This area has been developed over the last 6 months. Soybean and corn do not need permanent irrigation as rice, only rainfalls and those crops have a different sowing season than rice. Subject to weather evolution in the coming months, we will be still able to add more surfaces to soybean cultivation by reallocating some unused rice surface to this crop.