He agricultural sector went through a difficult year, driven by the droughtand the High costs, with a major deterioration of the margins in the main activities during the year 2022/2023, according to an Exante analysis that assessed the situation of crops, meat and milk.
The report highlighted that during the past year the area planted in winter had a extraordinary increase, with yields at very high levels, mainly from the rape, whose harvest doubled.
From Exante they also explained that the planting decision was made with the prices at peak values, but in the following months they had a downward adjustment. At the same time, implementation costs reached record levels, within a framework of sharp rises in the prices of several key inputs, something that led to a “appreciable deterioration” of the margins in winter crops.
Regarding the campaign summer, the consultant indicated that it was seen “severely impacted” by the drought, that caused the loss of a significant percentage of the planted area and resulted in a harvest of soy “historically reduced”, in the order of 700,000 tons. And he pointed out that, even with prices above 500 dollars per ton on average, the combination of very high costs and minimal yields would have left heavy losses in the crop.
For his part, he rice achieved a very good harvest, with very high yields, higher than 9,500 kilos per hectare, according to the ACA. Within a framework of lower global supply of the cereal, international prices registered significant increases, which allowed an increase in the price received by the producer. However, the high production costs they would have resulted in worse crop margins, Exante analyzed.
The situation was similar in the milk and meat industries
In dairy, the consultancy highlighted that the export prices of the dairy industry Uruguay they remained firm in the last cycle and allowed to sustain “high prices” from the milk to the producer.
At the same time, the milk remission Industrial plants fell, with a significant impact from the drought during the summer, although the drop would have been limited. However, the high costs incurred by the sector, mainly in relation to supplementation for cattle feed, would have resulted in lower margins in this dairy exercise, argued the consultant.
Regarding meat, Exante assessed that the slowdown in external demand, especially since China, led to a significant price adjustment and a contraction marking of the task from the beginning of the exercise.
Thus, within a framework of lower activity and lower values, cattle prices were adjusted sharply down although they remained high in the cycle average. These two situations combined would also have left very limited margins in livestock establishments.
Expectations for an improvement for the current year
Despite this situation, the consultant anticipated that during 2023/2024 the moderation of some costs and the reversal of the shock of the drought “should allow a recovery of results. However, they admitted that there are “significant risks at the level of prices and weather, due to the arrival of ‘The boy'”.
For Exante, the sector will also have an important boost in the forestry activity: is that this year, before the start of operations of the new UPM pulp mill, a marked improvement in activity is expected.
Source: Ambito
