Brazil Agribusiness Quarterly Q1 2021

This quarterly update on Brazilian agriculture provides a market outlook for sugarcane, corn, coffee, and other key commodities, and gives an overview of what developments to watch in the weeks to come.

Highlights include:

- Rabobank forecasts fertilizer demand for 2021 at 40.6m metric tons, up 4% YOY, driven by higher farming margins for major crops and area expansion.

- 2021/22 opened amid uncertainties about the size of the crop, the outlook for ethanol demand, and the availability of logistics for sugar exports.

- Ample availability of Brazilian coffee and uncertainties about global demand should cap ICE prices despite lower forecasts for the Brazilian 2021/22 crop. Prices are expected to range between USD 1.15 and USD 1.40/lb.

- Brazilian soybean production is expected to reach a new record of 133m metric tons. Soybean prices (in BRL terms) have been supported by a weakening BRL and strong CBOT.

- Corn prices at BM&F achieved a new record of BRL 1,518/metric ton in early March 2021 as a result of low stocks, weak summer corn production, and higher exports in early 2021.

- After achieving record production in the 2019/20 season, Brazil exported cotton at historically high levels from September 2020 to February 2021.

- Irregular rains and the Brazilian cattle cycle supported live cattle prices in the wake of weaker domestic demand. An increase in shipments to China and a new financial aid package may boost seasonal demand.

- Despite lower supply, FCOJ inventories remain sufficient and low prices persist, raising questions about demand strength. Forecasts for the upcoming Brazilian harvest are key for new market movements.

- High feed costs are impacting dairy margins at a time when demand is weaker due to the worsening of the pandemic. A renewal of the cash transfer program should bring some support to the domestic market in Q2.

- Global pulp prices continue rising and are approaching record levels last seen in 2018. For Brazilian pulp players, a weak BRL boosts profitability even further. Strong demand in Asia is expected to sustain prices in Q2. 

- An exchange rate of BRL 5.35/USD is forecasted by the end of 2021.

 

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  • Andy Duff

    Head of RaboResearch Food & Agribusiness - South America; Global Strategist - Sugar
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  • Matheus Almeida

    Senior Analyst – Farm Inputs
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  • Wagner Yanaguizawa

    Analyst - Animal Protein
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  • Guilherme Morya

    Analyst - Beverages
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  • Andrés Padilla

    Senior Analyst - Beverages, Dairy, F&A Supply Chains
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  • Marcela Marini

    Senior Analyst – Grains & Oilseeds
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