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 1^st plots sowed are developing well so far. We are at 1^st stage and will start beginning of December with 2^nd 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.

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).

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 1^st 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.

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.

Weather/Situation: Low rainfalls were so far registered compared with the historical average for the same period. Only some patchy rains were recorded which didn’t allow us so far the fully our artificial lake (480 ha). We are still missing 50 cm of water and the level of the river is currently to low to pump the balance.

The latest forecasts are not favourable for the coming months as lower rains than usually are predicted for July and August with higher temperature than usually for this period ; the situation is expected to get worse in September when the sowing season of rice and soybean will started.

It’s likely that La Niña will redevelop in the coming months with a peak in December/January for our region. A more intense drought than in 2020/21 is expected as you can read in the article from ABC Colour.

Soybean land preparation: 650 ha among 1,100 are in the final stage of preparation and we are currently performing the last labour in block B. The hatched soybean area will be terminated by the end of 2^nd week of July. In the reaming area, we have two passes to make with ploughing machines – calcareo to apply and another final plough to finish the sequence.

In order to optimise field-level management, we are also going to adopted Real Time Kinematic (RTK) technology using GPS guidance systems to ensure we have the most accurate picture of the field and achieve the highest level of precision to create an accurate well balanced design. We are already using this technology for our rice activity and we will replicate it for soybean cultivation. Basically, topographical data collected are then processed with a specific software to perform optimal land levelling with the tractors on autopilot. The system not only offer higher accuracy but is also reducing the amount of time it takes to complete our land-levelling operations. All those information can also be reused for future seasons.

We have also cleaned drainage for soybean plots as you can see below.

Rice: Given the high probability of a new drought, we are evaluating with our partner GPSA the possibility to reduce our rice surface exposure and to reallocate part to soybean cultivation. Our “base rice surface” is amounting to 1,650 ha of which we believe around 30% can be reallocate this cycle to soybean cultivation. Furthermore, outlooks for soybean are attractive as there is a strong demand led by China and stocks are low.

Lower rainfall in the region has impacted the Paraná river flow, which has dropped to less than half of historical averages. This affects its navigability and concerns agribusiness since a large part of crop harvests from Argentina, southern Brazil and Paraguay are exported via the ports of Santa Fe. The Paraná is one of the longest lowland rivers in the world with almost 5,000 km long.

According to the Rosario Stock Exchange, the low water level, considered as the most severe in 50 years, cost exporters already $244 million in 2020 as vessels were unable to operate or load normally. This means that Argentine and Paraguayan exporters are not able to benefit as much as they could from high international prices for agricultural products.

As our farm is situated along the river Tebicuary (a tributary to the Paraná River), we clearly face currently a shortage in water. So far, we could pump during 2 days in June, bringing our water reserve in our artificial lake (480 ha) to a bit less than 25% of its capacity. We need still 1 million liters of water to be at optimal capacity.

We are now in winter period and temperature are higher than usually for the season. Most of the times, this mean that a dry spring and summer are going to follow and that existing water reserves such as lagoons, rivers, etc will not be sufficient to compensate for the entire season the lack of water/rains. If that happens, we are going to reallocate some rice surface to soybean cultivation as this crop is not anaerobic like rice.

The situation faced currently in southeast and central-west of Brazil makes us think that dryness will hurt our rice activity in the coming season. Southeast and central-west of Brazil (2 key regions) are facing the worst drought in nearly a century, and is wreaking havoc on hydroelectric dams and crops.

As if the fallout of the drought weren’t enough, epidemiologists warn Brazil may also be facing a brutal new surge of Covid-19.

We are currently applying a fertilizer rich in limestone to enhance our future soybean cultivation as our soil is relatively acidic. Calcareo have been applied and incorporated so far in 300 ha among the 1,100 ha dedicated to soybean cultivation.

We are waiting for some rains to extend the process in order to get an optimal soil quality to sow soybean. Rains would also help as the soil would be more malleable after.

However, we have to face some delays in delivery of the calcareous fertilizers (calcalero) as national strike of truckers begins on May 24. Truckers union and allied organizations protest against rising fuel costs.

As for our rice activity, we are in the low season. Due to shortage of rains, we could only pump water during 10 days in April from the river and recover so far only 20% of our capacity in our artificial lake (480 ha). We have still time before the beginning of the rice sowing season (forecasted to begin on August 20) but the latest weather forecasts are predicting lower rainfall level than usually for July and August with higher temperature than usually for this period (ie winter period). We hope that we are not going to face the same shortage and drought situation than in 2020/21 … so far, forecasts are neutral for the season.

While Paraguayan authorities took starker approach at Covid-19 with further restrictions, we have continued land preparation work for soybean cultivation next season.

By now, 50% of the entire development process has been completed on the entire surface dedicated to soybean cultivation (1,100 ha).

Soybean land preparation involves plowing to “till” or dig-up, mix, and overturn the soil as you can see on the video and pictures. It also requires harrowing to break the soil clods into smaller mass and incorporate plant residue, and leveling the field.

Given the specificities of our farm’s soil (pH), the next step will be to apply a fertilizer rich in limestone to the freshly prepared land. We expect that all land preparation work will be completed by end of July.

Regarding our rice activity and given the fact that we sold all our production, we take advantage of this situation to offer to our neighbors our drying and storage facilities in order to generate incremental revenues.

As rains are back and pumping restrictions have been lifted, we take the opportunity to fill our reservoir which was completely empty given the intense drought we face earlier this year.

As previously mentioned, we have agreed with our partner to add soybean cultivation to our mix for diversification purpose. Our objective is to develop 1,100 ha of soybean cultivation at the farm over the next 3 years.

On April 9, we have started land preparation work for soybean cultivation in block H. All the soybean area which is going to be developed was till now a complete virgin land.

Soybean land preparation typically involves plowing to “till” or dig-up, mix, and overturn the soil. It also requires harrowing to break the soil clods into smaller mass and incorporate plant residue, and leveling the field.

Positive outlooks for soybean cultivation: The change in eating habits in the higher income population is expected to increase demand for protein as well as the replenishment of Chinese pig herd should keep the demand for soybean high for the next years. World demand for soy is expected to grow by 1.5% per year until 2028.

Argentina, Brazil and USA Soybean carryout Vs Consumption/Use (Source: USDA/Wasde)

On the other side, stocks are predicted to tighten on falls in key exporters and China which pushes prices up. Soybean prices have strongly recovered in 2020 coming back to 2014 levels.

International 6-year soybean prices (USD/Bu)

Source: Bloomberg

Soybean production in Paraguay is forecasted to increase by 20% over the current decade, and we are pleased to be part of this grow.