Summer crops planting in Uruguay has been slowed by wet weather: While farmers in Brazil are confronting dry weather, it has been just the opposite in Uruguay where December was a very wet (some farmers says that it could be the wettest in 100 years). We have registered several heavy rainfalls in a very short period of time (we are facing the same situation at Salitre Cue farm in Paraguay and at Curupi Pora in Corrientes) and had to defer sowing of soybean and late corn several times.

For corn: Over 300 ha have been planted and you can see below early sowing corn on the 1^st picture, followed by a late sowing picture of corn.

For soybean: Around 900 ha have been planted between soybean #1 and #2. You will see below early sowing soy on the 1^st picture, followed by a late sowing picture of soybean.

So far, both crops are in good conditions and it is too early to estimate or to quantify effects of this situation but delays in development stages can be anticipated. The forecast is calling for more rainfall in Uruguay, so it is possible that not all the intended soybeans will be planted.

The farm is recovering more rapidly than foreseen from the recent drought, but the damage is done for this campaign.

To restore healthy pastures as quickly as possible, we concentrate on protecting existing plants and encouraging new plants. You can see OAT and Ray-grass planted 3 months ago which have developed properly.

Summer crops (Soybean & Sorghum): Harvest of both crops is now completed. Soy plants were the most affected by the drought since this crop is a large water consumer. The most important times for soybean plants to have adequate water are during pod development and seed fill, and water was then lacking as previously detailed. As a result, we get 1,25 t/ha (equivalent to the nationwide soybean yield estimated by the D.I.E.A.) vs 2,5 t/ha budgeted for the 710 ha sowed – some plots registering 600 kg/ha while others 1,7 t/ha.

Sorghum yields were less affected as we registered 4 t/ha vs 4,5 t/ha budgeted.

Cattle activities (4,065 heads): Because drought weakens plants and amplifies the effects of grazing, we have limit the time that animals spend on each pasture and supplemented the herd with silage and corn. As a result, beef production has also been affected by the drought but to a lesser extent than expected given the intensity of the drought faced.

In addition, we are in the process to increase the stocking rate of animals, mainly with cows in order to get more calves in the future. The male calves are going to be sold with 210 to 230 kg and we must compensate those with bellies. Once the number of bellies will be stabilized, we will increase meat production.

Between autumn and spring services, 2,000 bellies are going to be at work. Next year, our objective is to have around 2,400 bellies if climate conditions remain favourable (no floods in particular).

Since the beginning of 2018, there has been a significant reduction in availability and access to water due to a deficit caused by a lack of rain, which has been further affected by the La Niña phenomenon.

This situation has led to the worst drought conditions faced in Uruguay since 2008/09. Local industry officials anticipated economic losses exceeding $500 million, which would rank as that nation’s most expensive disaster in history. The Uruguayan government had to declare an agricultural emergency due to drought in 14 departments in order to support family farmers (no more then 500 hectares of land to be eligible).

For us, both of our Uruguayan farms, located among the most affected departments in the country, have suffered from the prolonged drought, damaging corn and soybean production as well as cattle operations. So far, Santa Maria farm (Flores) was the most affected.

Rainfall register: Cumulative rainfall for July-March period was 737 mm, -32% compared with the historical average for the same period. During the critical month of February where corn and soybean are in blooming stage, we register only 30 mm of rain Vs 143 mm as historical average. This trend was not reversed with 26 mm registered vs 143 mm historically.

Winter crops: 374 hectares were sowed and we get 1,5 t/ha vs 3,5 t/ha Budgeted. Climate vagaries have affected production: Excess rainfalls of August and lack of water during maturity season (November/December).

Summer crops (Soybean & Corn): Around 500 hectares of soybean #1 have been sowed with delay due to soil conditions. So far, over 220 hectares have been harvested with a preliminary yield of 1.8 t/ha vs 0.6 t/ha to 1.9 t/ha in our area. Double–crop soybean over 400 hectares was done but harvest did not started yet – expected yield should be around 1t/ha vs 1.8 t/ha budgeted.

As for corn, we are going to start soon with the harvest and in terms of yield, we expect to get around 3 t/ha vs 5,5 tons/ha budgeted.

Cattle activities: Pasture to feed the herd have evaporated due to the drought forcing us to place the calves in the feedlot and supplement them with corn. pregnant cows are also going to be supplemented as pasture are to poor in the field. Those more sensitive categories have to be management in priority.

For now, we can mitigate the impact of the drought on pastures by supplementing the herd with silage and corn. However, cattle operations are going to be affected next cycle as pasture are not going enough time to recover and their sowing period is behind us.

Uruguayan farmers have decided spontaneously to voice their anger in the street against the government during the January recess. They strongly protest against the government to demand improvements in conditions to promote profitability in the agricultural sector. Farmers are suffering from prices increase of most crucial inputs such as fuel, power, water, etc, establishes administratively by the government, which make several farm activities unprofitable.

The rural sector is demanding lower production costs as well as measures to resolve the country’s lagging exchange rate. A cheap US dollar in Pesos, makes Uruguay a very expensive costly country to produce. Furthermore, the Uruguayan government needs also revenue to lower the deficit and retain the investment grade: so far it has been done mainly by increasing taxes directly or indirectly through the goods and services provided by government monopolies.

 Uruguayan agricultural producers demonstrate massively on January 23, 2018, joined also by industry and workers.

“Local press articles from MercoPress, dated 01/24/2018″.

Crops activities are currently suffering from dryer weather conditions for a number of weeks in Southern Brazil, northern Argentina and Uruguay, driven by high temperature and limited rainfall.

In some areas, it has deteriorated to the point that soybean or corn sowing have been suspended, waiting for additional moisture.

For our own grain production performed in Uruguay: Soybean #1 planted by mid-November is doing fine so far at Santa Maria (over 430 has) while the situation is getting more complicated at La Esperanza (over 700 has) due to lack of water during pollination.

Furthermore, we just completed second-crop sowing of soybean (over 370 has) and of corn (280 has) in Santa Maria after being delayed various time due soil conditions (lack of moisture and rain to insure germination).

Those conditions have the potential to reduce yields and quality of grains. If the situation persists, cattle operation might also be affected (pasture contraction). Rains are expected to improve conditions.

“Uruguay climate report December 2017 and forecast 2018, published by INIA”

Crops activities: Over 710 hectares are currently sowed with soybean. We are targeting a yield of 2,5 tons/ha.

We are also going to sow 70 hectares with sorghum which should produce 330 tons of grain. We have given for rent 400 hectares to a third party for rice production.

Cattle activities: The entire herd is in very good shape and has access to dense pasture. For the current cycle, we are expecting to produce 530 tons of meat with an average herd of 4,000 heads.

We will have around 1,590 cows in spring service. Autumn service of heifers took place (insemination of 380 heads) and we obtained a pregnancy ratio close to 92%.

Winter crops: 100 hectares planted with barley have been harvested so far and 264 hectares are remaining.

The 40 hectares planted with OAT are almost harvested. Our OAT production is directly delivered to a Uruguayan malt house with which we are cooperating since years.

Summer crops (Soybean & Corn): 500 hectares are planted with soybean #1, of which 425 hectares have already been sowed. We are targeting a yield of 2,8 tons/ha. We will then double–crop soybean over 400 hectares.

As for corn, we are going to start soon with the sowing of 290 hectares. We are targeting a yield of 5,5 tons/ha for this crop.

Cattle activities: The entire herd is in very good shape and has access to dense pasture as you can see. For this cycle, we are targeting to produce 475 tons of meat with an average herd of 3,100 heads.

Currently, we have around 920 cows in spring service.

The Finnish pulp and paper maker UPM (listed on Nasdaq) and the Government have signed a preliminary agreement for the construction of a new pulp mill ($2.32 billion) to be located close to the city of Paso de Los Toros, in the department of Durazno. The Government will develop the rail and road network by funding the construction and long-term maintenance of the network.

If UPM decided to move forward, the mill will have an annual capacity of about 2 million tons of eucalyptus market pulp. The impact of this project for Uruguay is estimated at 2 GDP basis points and more than $1 billion in export revenues each year.

The project will be really structuring for the country on account of its importance for the economy of Uruguay and for whole infrastructures it will create.

“Press Releases UPM dated 11/08/17”