Market Update October 2020

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

Climate

Uruguay had very good rainfall throughout the country at the end of September. In two to three days most places got 70 to 100 ml. This was very important for crops. New significant rainfall is expected for October 20 which will be very important again for winter crops. Temperatures are rising and the risk of frost at night seems to have left.

Cattle

An increase of milk prices was announced by Conaprole. The new price is now 30 dollar cents per liter. This implies a rise of 4%. In general, milk production in 2020 was at record high due to good grass growth in winter and early spring. This year milk production is nearly 6% higher than a year ago. In addition, the export prices and volumes are positive, mainly to Brazil and Algeria. Fewer dairy cows are slaughtered and a new flux of export of living dairy cows to China has strated. This brings in more cash flow for dairy farmers.

End of September and start of October is the time of year when bull auctions are held. Over 2000 bulls were sold with a total value of nearly 7 M USD. Prices in USD in 2020 were slightly below prices last year. Mostly sold are Angus(55%) and Hereford (30%). Best breeding ranches in Uruguay consolidated their position with the best prices.

The export of high quality beef to the EU, Hilton quota, is going rapidly. In the first three months of the new period that started in July, exports of this cut already took 32%. Export of beef to the US has almost filled the quota at three months before closing this export regime. The grain-fed quota to the EU, 481 is falling behind in numbers. 15% less than a year ago. The Uruguay quota to Canada however is 9% up as compared to a year ago.

Crop

The expected quality and yields of winter crops such as wheat, barley and canola look very promising as climatic conditions were very positive so far. Hopes are that this will continue throughout spring and that crop farmers will have some good revenues in this cycle. Seeding of summer crops such as rice and corn started in September and soy beans will follow in October. Prices for these crops are better than a year ago, but climatic conditions for coming summer are a bit complicated with an expected La Niña dry spell.

Developments

The EU-Mercosur trade agreement will not be ratified by the EU Parliament and hence not enter into effect. The trade agreement dealt with many sectors and would have had an important impact on agricultural trade with South American beef having slightly better access to the EU and for example, EU dairy products better chances to compete in the MERCOSUR countries, Brazil, Argentina, Paraguay and Uruguay. The reason to justify this non-ratification is the environmental concern regarding deforestation in the Amazon. The lobby group COPA-COGECA representing European farming industry is extremely strong and it made a strong case not to ratify this trade agreement.

Another issue is that the EU Commission negotiated this trade agreement without a specific mandate from the EU Council which they would never have gotten in the first place as both France and Ireland were strongly against a trade agreement with the South American bloc.

The Uruguayan government now focuses on trade agreements with China, USA, Japan and South Korea in order to have a level playing field with the ´competing´ countries Australia, New Zealand and Canada.

Prices Livestock

Prices Grains