Brazil Agribusiness Quarterly Q2 2021

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:

- Rabobank revised its demand growth projection for fertilizers in 2021 upward to 5%, with total demand reaching 42.7m metric tons. Imports are forecasted at 36.5m metric tons, an 11% YOY increase.

- Results from the cane harvest up until mid-June show that yields are 10% below those of the previous season. This, plus firm international oil prices, is providing support for world sugar prices and local ethanol prices.  

- Despite ample Brazilian coffee stocks, the winter season brings (frost risk) concerns for the 2022/23 harvest, increasing market volatility. Rabobank projects prices at ICE-NY above USD 1.43/lb in the short term.

- Brazil is expected to plant 39.8m hectares of soybeans. Assuming the yield trend line, soybean production is projected to reach a record of 142m metric tons in the 2021/22 season.

- Expectations of lower total corn production, BRL appreciation, and weaker CBOT levels applied downward pressure on corn prices last month.

- Record exports during cotton’s off-season have diminished local availability. Cotton production is estimated at 2.4m metric tons (11m bales), a reduction of 25% YOY.

- High costs and dry weather have limited cattle supply and kept prices at high levels. However, future prices have receded, limiting the chances of reaching new records in 2H.

- A second consecutive small harvest ahead should support global orange prices with inventories at lower levels. High fruit prices are adding pressure to processors’ margins. 

- Farmgate milk prices remain at elevated levels, with production advancing slowly as dry weather and high feed costs impact farmers’ margins. Stronger economic recovery could favor demand in the second half of the year.

- Global pulp prices are hovering at elevated levels after a strong rally. Demand in China is slowing as supply accelerates, which could bring some weakness before consumption gains steam again in Q3.

- An exchange rate of BRL 5.15/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,Packaging & Logistics
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  • Marcela Marini

    Senior Analyst – Grains & Oilseeds
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