Brazil Agribusiness Quarterly Q1 2022

Here are the main highlights for some of Brazil’s key agribusiness sectors. The full report provides a complete outlook for all sectors and the developments to watch in the upcoming weeks.

Highlights include:

- The war in Ukraine will continue to be the key factor impacting global fertilizer supply and prices. Meanwhile, Brazilian farmers are facing higher production costs and have limited visibility on when fertilizer prices will fall.

- As the mills gear up for the start of another campaign, upside risk for world oil prices and the possibility of government intervention in local gasoline prices create an uncertain outlook for ethanol pricing in 2022.

- Rabobank forecasts the 2022/23 Brazilian crop at 64.5m bags, of which 41.4m are arabica, based on a recent crop survey. This represents a drop of 10.4% and 21.9%, respectively, compared to the last on-cycle crop in 2020.

- During 2021/22, La Niña reduced the Brazilian soybean crop by 17m metric tons, to levels 13m metric tons below last year’s production.

- Rabobank estimates that, if weather allows, Brazil should produce a record 113m metric ton corn crop in 2022 – 25m metric tons higher than the previous crop.

- Rabobank estimates that Brazilian cotton production, aided by weather and area expansion, will recover to achieve a total of 2.9m metric tons (13.2m bales) in 2021/22.

- The supply of grass-fed cattle is improving, but live cattle prices remain firm, sustained by the strong pace of exports and the greater bargaining power of ranchers.

- Low inventories are sustaining Rotterdam-listed prices for FCOJ at around USD 2,000/metric ton. Early signs for the 2022/23 crop are positive, but given the uncertainties about the dry season, risks remain.

- Processors are accelerating production at a time of declining raw milk availability, as demand expectations are seeing a slight improvement. Higher prices at the farm and retail levels reflect lower milk availability.

- Global pulp prices continue increasing amid supply-side problems in Canada and other regions and firm demand from buyers. Thus far, geopolitical uncertainties are having a limited impact on the market in 2022.

- We project the BRL at 5.25/USD by the end of 2022. Despite the real’s recent outstanding performance, risks are still asymmetrical and weighted to the downside. As such, we may see a partial reversal of this movement soon.

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  • Andy Duff

    Head of RaboResearch Food & Agribusiness - South America; Global Strategist - Sugar
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  • Andrés Padilla

    Senior Analyst - Beverages, Dairy, F&A Supply Chains
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  • Guilherme Morya

    Analyst - Beverages
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  • Marcela Marini

    Senior Analyst – Grains & Oilseeds
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  • Bruno Fonseca

    Senior Analyst – Farm Inputs
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  • Wagner Yanaguizawa

    Analyst - Animal Protein
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