The warlike conflict that is taking place in Ukraine, given the invasion of Russia, generates impacts on the productive systems of Uruguay based on crops that occur immediately or are projected in the short and medium term, some positive and some adversea situation that has everyone involved in the operation expectant and concerned.
Not only the prices of several commodities are adjusted upwards, also those of several key inputs for the production of grains with various destinations and feed for livestock rodeoslike pastures. They are uploads that have occurred or are outlined in agrochemicals, fertilizers and seeds. The values of those products they were already moving higher and that was accentuated since the middle of last week.
On the one hand, taking advantage of good prices for grains will not cover all farmers or the harvest. At once, the negative weight of a higher cost derived from the increase in the prices of some inputs will be greater for those who have not yet stocked up with them. And it is estimated that this happens to the majority, given the time of year in which we are.
In an import firm, the decision was made at the end of the week to pause the commercial procedures for the purchase and sale of these inputsin order to wait for the end of the Carnival holiday and see how the market is rearranging.
It is understood that there is, beyond price movements that may seem reasonable, some speculative attitude and therefore point out that It’s not a good time to close deals.
As quickly, it was indicated, by the end of this new week a decision could be made that affects stocks, placements and the prices to be taken and transferred.
EO
A producer consulted by The Observer At the end of the week, he pointed out that Russia barely directed the invasion of Ukraine there was rapid talk of a real rise in the price of soybeanswhich is located at record values (the price in some futures references exceeds the emblematic US$ 650 per ton), also for wheatwhich is above US$300 per ton, but There was not so much talk about a spike in the values of raw materials to develop agricultural work.
This immediate reaction, both the increase in the prices of various products and the inputs to manufacture them, is a problem not exclusive to Uruguay or the region, it affects the vast majority of agro-exporting countries.
“A war never works”
Jorge Andrés Rodríguez, president of the Rural Association of Soriano (ARS), the first thing he said was that a war scenario “is something very unwanted, something we never want, something that should not happen, Whether or not it works for prices, a war never works, it’s never a good thing”.
But if it happens, like now, is a new player in the markets that establishes a framework of high volatility that “does not work”. For the country, for the producers, what is useful is a scenario “with clear and stable rules,” she added.
Regarding the use of better prices, he mentioned that in the case of wheat there is still a long way to go before planting and for the producer to have a real reference price at which to start placing part of his future production.
In the soybean category, he warned that many people have already sold a lot in advance, as is often the case, especially when the value exceeded US$500, a price considered very attractive. Therefore, it will be necessary to see how much the crop yields to see what additional amount to what is already marketed can be placed at the current values, which are clearly higher.
Rodríguez, regarding the costs of the inputs to produce, said that it is obvious that in a scenario like the one these days they are going to increase, and not only that of the aforementioned inputs that are closely related to the rise in oil, the fuel that mobilizes machinery, tools and productive vehicles will also rise.
john samuel
Filling tanks with seeds for planting.
Uncertainty
Felipe Foglino, agronomist and private advisor to agricultural companies, highlighted that the word that best defines what is experienced in the market is “uncertainty”.
Whoever wants to buy these supplies today will find them in the market, but every week that passes the price increases, he reported.
“There are weekly rises in these supplies,” he said. And he added that “the uncertainty is enormous”, alluding to the fact that An eventual extension of the conflict will surely affect the arrival flow of the products that Uruguayan companies import from Russia..
Added to the difficulty of buying are the logistical problems that have been expressed in the international context for the transfer of merchandise.
Foglino said that the uncertainty exists at a key moment of the year, when the start of the harvest of summer crops is near, which after the last rains could be positive in terms of quality, volume and prices, which in a normal scenario sets a area growth for the following winter campaign, something that may be in doubt in case the necessary inputs are not available.
There are many companies, of different sizes, cooperatives as well, that With good income due to the rising prices of grains, while they are selling, they will want to close purchases of supplies and that is another factor that will be influencing the market..
Finally, Rodríguez pointed out that the desire is for the rise in prices to be used in the best possible way and for the rise in input prices to have a negative impact as little as possible, so that the sector maintains its dynamism, accentuates its investments and productions and that this allows the positive spillover of the productive sector in the national economy and in the communities to be sustained.
