Brazil Agribusiness Quarterly Q1 2023

FX: We see the USD at BRL 5.35 by end-2023 and BRL 5.10 by end-2024. Risks are still skewed towards depreciation in the short run. The reopening of the Chinese economy and disinflation in Brazil bring appreciation drivers in the medium run.

Fertilizers: Brazilian farmers are set to increase fertilizer purchases in Q2 23 as they are currently behind schedule and international prices are offering an interesting ratio at current levels.

Cane, Sugar, and Ethanol: While ethanol prices look likely to disappoint, our base case of a larger cane crop plus firm sugar prices should support margins for millers and cane growers in the new 2023/24 season.

Coffee: Rabobank revised lower the 2023/24 Brazilian harvest by 1.1m bags (60kg). Production is forecast at 66m bags, of which 42.7m is arabica.

Soybeans: A record output of 153m metric tons is confirmed for the 2022/23 crop. That will represent a gain of 24m metric tons year-over-year.

Corn: Rabobank estimates a record corn harvest of 126m metric tons. Corn and soybean harvest will represent an increase of 35m metric tons compared to the 2021/22 crop.

Cotton: A challenging global economic environment is suppressing global demand, negatively impacting cotton prices.

Beef: The resumption of Brazilian exports to China after one month of suspensions should raise traded volumes and impact live cattle prices positively in Q2 2023.

Orange Juice: Record high OJ prices in Q1 2023 as supply constraints continue and inventories remain at five-year lows. In Q2 2023 all eyes will be on the initial forecasts for the upcoming 2023/24 harvest in Brazil.

Dairy: Milk production to continue recovering slowly in Q2 2023, while imports remain elevated. Weaker demand could mean a flatter price curve in 2023 as milk availability rises.

Pulp: Weakening demand, record-high inventories and new supply coming online are all impacting market sentiment. Lower prices expected in Q2 2023 as buyers bargain for more discounts in key markets.