Currently “the accumulated precipitation deficit in the core zone between 2020 and 2022 is lower than that recorded between 2007 and 2009, one of the most intense droughts ever to affect the region” said the National Drought Monitoring Board in its latest report.
The weather is having a direct impact on pasture growth and consequently on subsequent silage making, which will result in higher feed costs. But the complications do not end there; the corn season may be worse than the wheat season.
Early corn may represent only 20% of total production. This means that corn will be scarce both in our country and in the world, since Argentina usually enters the world market with an availability of 25 million tons for the March-April binomial and for next year only 9 million exportable tons are expected to be available at that time.
Add to this panorama the withdrawal of Ukraine from the world market, a Brazil that harvests in the middle of the year and the USA with surprisingly low stocks in historical terms, and we face a strong forecast of an increase in the price of one of the main components in the diet of dairy cows.
So far production numbers have not been affected by the stocks that producers still had and have made available to their animals to take advantage of the start of the season. The real concern is how they will enter next fall.
The hope is that the weather will change, but the forecasts are not very positive. The National Weather Service review is harsh for the November-December-January quarter. The forecast is for Below Normal over the entire north, northeast and east-central parts of the country.
In addition to the poor rainfall forecast, temperatures are also forecast to be above normal over the central-eastern part of the country and the center and north of Patagonia.
With such harsh forecasts ahead, it is necessary to pay more attention to industrial stocks. The latest numbers shown by Ocla are from August this year and reveal that we are facing the lowest volume for milk powder since the series of surveys began in 2015. In the overall volume of all products only August 2019 was evidenced below the current numbers.
With production threatening to decline, poor stocks in the industries and financial disincentives ahead the Argentine dairy faces a very complicated 2023 at the beginning.
