Farmland Uruguay Market Update December 2018

Monthly market update providing objective information about crops, cattle, forestry and other diverse farming business in Uruguay.

Climate

Spring and early summer have seen mild temperatures and sufficient rainfall. So far, every week there was some rainfall throughout the country. Conditions were almost ideal for both the harvesting of winter crops and seeding of summer crops. Mid December saw very severe rainfall in Southwestern Uruguay (250 mm in 3 days). In some places summer crops needed to be replanted after heavy rainfall and 30% of winter crops could not be harvested yet. Outlook for the summer is positive with relatively high temperatures for the south of Uruguay.

Cattle

Quota 481 for exports of grain fed beef to the EU is being discussed as the EU promised Trump administration to compensate US farmers for losses they would suffer as a result of a trade war with China. The EU decided to reserve 35.000 ton of grain-fed beef for the USA while almost abolishing the quota for other countries like Uruguay, Argentina and Australia. It´s not clear yet what the outcome of bilateral trade talks between USA and China mean for this quota.

Export of beef up to October was 137 M USD. An increase of 19% as compared to a year ago. Total value was 1.344 M USD. Nevertheless, beef is no longer the main export product. Beef was replaced by pulp which saw an increase of 33% due to excellent international prices.
Third commodity in terms of export are dairy products and especially butter and fresh milk.
Main destinations for exports of agro-commodities were China, Brazil, USA and Argentina.
Export of live animals picked up again in spring. Several companies exported cows to Turkey. From January to November a total of 352.954 cows were sold for exports. An increase of 43% as compared to the same period in 2017. 90% went to Turkey.

Crop

The exports of soy are slowly recovering from drought last summer. In October for the first time this year there was an increase as compared to a year ago. Soy was the fourth agro commodity so far in 2018 in Uruguay.
Winter crops had excellent yields with nearly all crops reaching record highs in combination with high quality grains. Only problem is heavy rainfall mid-December which is preventing harvesting of approximately 30% of winter crops.
For wheat the national average is close to 4.000 kg per hectare and the total volume 800.000 tons. Prices for wheat are currently approx. 200 USD per ton.

In canola average yield is approximately 2.000 kg per hectare, also in combination with excellent quality grain and oil.
Yields in barley are on average 3.700 kg per hectare or perhaps close to 4.000. Supply will be exceeding local demand and therefore part of volume will be exported to Brazil where there is a lack of barley.
Iraq is buying large amounts of rice in Uruguay. They bought 60.000 tons of rice in addition to 120.000 tons bought earlier.
Rice production is estimated to cover 146.000 hectares with a yield of 8.300 kg per hectare. This is a decrease in area which is slightly compensated by higher yields.

Local trusts buying land

This spring some local trusts have been authorized to enter the market and invest in Uruguayan farmland. Bearing Agro gathered 150 M USD in order to buy 20.000 hectares of irrigated crop land over 5 years. This is in follow up to a first round in 2016 when 50 M USD were allocated and 5.900 hectares were acquired. The strategy is to buy premium crop land and install irrigation systems.

Previously Agropecuaria del Litoral entered the market in September with a trust of 50 M USD for the investment in farmland.
There is also a trust backed by local pension funds that has gathered approx. 300 M USD to buy forestry assets owned by Harvard Asset Management.

Price Livestock