In January, we presented a webinar addressing the Prospects for Beef Cattle in 2020. We talked about reducing the forecast of growth of the global economy and 5 sectorial concerns that could impact beef cattle. Of the 5 points presented, 3 stood out.
To quickly review events in this short period and provoke a reflection on the increase in volatility in prices, we discuss below the evolution of some premises commented on.
Australia has raised meat prices globally due to the reduced supply of animals caused by drought and fire that hit large territory regions.
Swine fever strongly impacts protein supply in China, which consequently keeps the demand for protein steady.
The coronavirus has spread throughout the world, causing extremely negative impacts on the growth of global economies.
Brazilian exports remain high and gain competitiveness.
Despite these pressures, meat exports accumulated up to February 2020 were 4.6% higher than the same period in 2019.
The Brazilian ox that had lost competitiveness at the end of 2019 recovered, reaching US $ 33.00 / @, in the last days. This level is one of the lowest since 2006 and returns the Brazilian @ 40% cheaper than the average of exporting competitors. Best level since July / 19.
This drop in prices puts Brazil back in the sights of importers.
Stocks crash with Coronavirus expansion
The world’s stock markets collapsed. Investors started looking for lower risk in their assets due to fear of the paralysis caused by the virus’s expansion.
At BMF, it couldn’t be different. The future maturities of the live cattle collapsed, reaching an R $ 40.00 / @ fall in maturities in May and October, March 18, 2020. This decrease represents a 21% reduction over the expectations of 12 days earlier, in the BMF itself.
To understand the impact of this fall, Agromove reviewed the impacts of significant and potentially damaging crises on the market, such as foot-and-mouth disease, weak meat, and the 2008 global financial crisis. Each of them showed 17%, 11%, and 16%, respectively.
In all these crises, domestic consumption increased and played a significant role in stabilizing the market.
The perspective of a scenario without breaking the maxims that occurred on November / 19 is confirmed so far.
We warn against a scenario where there was no prospect of significant increases in the price of at-sign. We highlight the points mentioned above and similar highs in the past to validate our projection.
As we can see in the chart below, available on the Agromove Platforms, prices are moving within the confidence band that we projected in the Webinar Perspectives for Beef Cattle in 2020.
Opportunities to guarantee a superior result
In the Prospecting Webinar for Beef Cattle in 2020, we highlighted opportunities to buy and sell on our platform during 2019 and 2020. Some customers took the opportunity to protect the sale of live cattle above R $ 210.00 / @. Others bought corn below R $ 40.00 / bag or guaranteed calves below R $ 1,300.00 / head.
Since October 19, we have demonstrated how to work with Projections and Probability of Fall tools to help producers ensure good results, even in turbulent scenarios. In the last two Webinars, we highlight how Intelligent Platforms help the producer work on replacing and purchasing inputs, ensuring profit in their operations.
Anyway, the future is difficult to predict. We focus a lot on the analysis of our tools that make it possible to understand short-term exaggerations. We check if this is outside the scenario we designed and if our premises are still valid or reinforced, as we commented in the article.
From experience in crises of this type, we should have a rapid recovery when the market realizes that it has been controlled.
The longer the crisis lasts, the greater the future residual in terms of damage. However, the market tends to over-compress demand, and this effect can cause a sling-type counter effect. Anyone who is well prepared and with the right tools will see how big this sling will be and how long it will last.
As the objective of helping companies to orient themselves towards the market and learn to explore opportunities in turbulent scenarios, Agromove developed the Profiting High Outside the Portfolio course. Sign up now.
Outlook for Corn in 2020
Last April, with producers having many doubts about the Corn Perspective in 2020, Agromove held its webinar with Rogério Banin do Agro Sucesso.
The topics covered were Perspectives for Corn in 2020 by Alberto Pessina and Planning a Highly Profitable Confinement by Rogério Banin.
In this article, we will comment on Alberto Pessina, founder of Agromove, on the Outlook for Corn in 2020.
Fall expectations for corn Safrinha
Although prices in April reached a record of R $ 60.00 / bag in Brazil, Agromove already predicted a drop due to the following assumptions:
- falling oil prices influencing ethanol prices.
- Record harvest perspective in the USA.
- Planting of the safrinha within the ideal window and sound development of crops.
- High world stocks compared to the last 12 years.
- prohibitive corn prices to chicken and live cattle, discouraging future production of these commodities.
Review of Assumptions and new expectations
Of the assumptions mentioned above, only the Brazilian safrinha was slightly revised due to the unfavorable climate during April and May.
The USDA revised its projections for the harvest in 2020 to levels higher than those forecast in April, pushing the quotes in Chicago to the lowest levels of the last 14 years.
For the first time in the last 3 years, these revisions also brought a perspective of global supply greater than consumption.
Outlook for Corn in 2020
With these assumptions confirmed, Agromove maintains its forecast of a fall in the prices of off-season corn.
Also, we alert you to the strategies covered in the webinar to guarantee a good feed cost in 2020. Now, the Agromove Premium Platform’s attention is focused on when the Probability of Falling Corn will enter the Shopping Zone again. These strategies have ensured above-average profitability for users, who, by accessing more detailed market information, are taking advantage of the substantial market volatility to guarantee results in their operations.
Intensive pasture management and irrigation trends
Appointed as one of the main economic activities of several Brazilian regions, livestock is directly related to the production of pastures, which are based on the food of most Brazilian herds in the meat and milk production chains.
According to the results of the 2017 agricultural census of the Brazilian Institute of Geography and Statistics – IBGE, there was an increase of 9.6% in the area of pastures planted between the years 2006 and 2017, which causes a demand for information about of pasture farming and management practices that can make it more efficient.
In recent years, many producers have increased investment in meat and milk production from intensive pasture management.
What is Intensive Pasture Management?
Generally speaking, intensive pasture management (MIP) – or intensive pasture cultivation or intensification of pasture production, consists of more technically managed to obtain better pasture quality and high productivity rates, allowing an increase in the support capacity of the pasture.
In the MIP perspective, pasture is treated as a crop. For its maximum use, technologies related to soil, plant, and animal are used, including irrigation, fertilization, rotational grazing, and animal welfare practices. , in addition to the use of cultivars with high production potential.
The practice of pasture irrigation has been developed in Brazil more intensely since the ’90s. Its primary purpose is to increase the production and the quality of the pasture, thus increasing the stocking rate.
It is a technique that contributes, to a certain extent, to production in periods of seasonality that occur in some areas of the country. In these periods, there is a reduction in the supply of forage due to the lack of one or more growth factors essential for the excellent development of the pasture, such as water, nutrients, photoperiod (hours of light per day), and temperature.
Research already carried out and the experience of producers who have used the technique demonstrates positive results with pastures’ irrigation. It is worth noting that the technique requires good planning and management and skilled labor and proper management.
The irrigation method most commonly used in the cultivation of pastures is sprinkling, in which the conventional sprinkler systems and central pivot stand out. However, in sprinkler irrigation, the system’s efficiency can be reduced, mainly due to the significant losses of water by evaporation and drag by the wind.
Considering the context of the search for the adoption of more sustainable management practices in agriculture that are based on the rational use of water and, even so, allow the achievement of greater productivity, the investment in more efficient irrigation systems such as localized irrigation systems it is very timely, even in the cultivation of pastures.
Localized irrigation systems are currently considered to be the most significant commercial interests in the irrigated agriculture market. This group includes micro-sprinkler and drip irrigation systems (superficial and subsurface). Recent projections by MarketsandMarkets ™ indicate that drip irrigation will be the fastest growing system in the automated irrigation market over the next five years.
Localized irrigation systems’ main characteristics are the application of water at high frequency and with low volume. As they are highly efficient systems, they contribute to what has been called “more crop per drop” – more excellent production per drop. According to data from the 2017 IBGE Agricultural Census, the areas with localized irrigation systems already correspond to 24.4% of Brazil’s total irrigated area.
More data on the use of irrigation in Brazil can be found in the article Precision Irrigation in Agriculture 4.0.
In localized irrigation, subsurface drip irrigation (SDI – subsurface drip irrigation ) has gained evidence in recent years. This system differs from surface dripping in terms of its emitters, which, in subsurface dripping, are located below the soil surface and close to the crop’s root system. This configuration makes it possible to apply water and nutrients directly to the “plant mouth,” which guarantees better use.
The emitters used in the subsurface drip are self-compensating and with anti-suction devices. This technology allows the maintenance of the same flow in a specific range of pressure variation. It prevents solid particles’ suction due to the negative pressure that occurs, for example, when the system is shut down. Proper irrigation operation will also depend on a sound filtration system.
Subsurface drip irrigation has been implemented worldwide, especially in regions with high evapotranspiration and water restriction levels. Consequently, there is an increasing interest in more information about this technology. In this sense, technical recommendations regarding the installation depth of the lateral lines (or drip lines) and the spacing between them are essential for the success of the irrigation project. This information depends, above all, on the characteristics of the soil and the crop to be used.
In general, among the advantages that the subsurface drip system provides are the reduction of the volume of water applied per area, reduction of agronomic costs aimed at the control of weeds and fertilization, reduction of mechanical damages to the irrigation system since the tubing is buried. There is also a reduction in energy costs due to the system’s low operating pressures (cv/ha).
Localized irrigation in Intensive Pasture cultivation
Subsurface drip irrigation has been used in the cultivation of sugar cane, corn, soybeans, coffee and several fruit trees. In addition to these crops, the use of this system has also been observed in the intensive cultivation of pastures , being currently one of the investments promoted by large irrigation companies with their respective cases of success.
Although it is still an incipient practice, there are already national records on subsurface drip use in intensive pasture cultivation. Some farms in the state of São Paulo, for example, have part of their pasture area subjected to subsurface drip irrigation, with production turned to hay and grazing.
One of the obstacles to investing in subsurface drip systems is its high initial cost, which can be around R $ 8,000.00 per hectare. Of course, this cost depends on several factors, one of which is the level of automation of the system. However, this high initial cost can be offset by being a system with longer useful life and which reduces operating costs with energy, labor, machinery, fertilizers, fertilizers, and herbicides, in addition to the possibility of being used by more than a culture in the same area over the years.
Forages of the genera Cynodon, Brachiaria, and Panicum are among those already used in this system. Considering the benefits that the technique provides and the results already achieved with its use, subsurface drip irrigation can gain more and more space in intensive pasture cultivation and enable a rise in productivity rates in a sustainable manner.
The irrigation of pastures is not an end in itself. Investing in the pasture means investing in higher quality meat and milk, investing in vertical production, which consists of increasing production without exploring new areas of cultivation.
Subsurface drip irrigation is already used in pasture cultivation, and that is a fact. It is a system that can be efficient in the intensive management of pastures, as long as a good irrigation project is carried out and the management is conducted correctly.
In this context, it is essential to carry out more technical studies on the subject addressed. As a result, more information and technical recommendations will be generated, contributing to more assertive decision-making in the search for satisfactory productivity rates combined with water’s rational use in agriculture.