Brazil Agribusiness Quarterly Q2 2023

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:

FX: We forecast the USD at BRL 5.05 by the end of 2023 and 5.15 by the end of 2024. In the short term, several factors support a stronger BRL. However, a lower Selic rate ahead and other risks like El Niño could pressure it.

Fertilizers: Fertilizer prices continue to trend lower. However, weaker soybean prices are increasing downward pressure on farmers’ margins and could translate into lower consumption of fertilizers in the second half of the year.

Cane, Sugar, and Ethanol: Harvest results to the end of May point to a strong increase in yields, triggering upward revisions to 2023/24 output. World sugar prices have given up some ground, but weather risks remain key to the outlook for 2H 2023.

Coffee: Coffee prices will remain under pressure in Q3 2023 given the size of the current 2023/24 crop and the favorable development of next year’s crop. A strong El Niño with disruptions in some important coffee-producing countries could cause prices to increase.

Soybeans: Although demand from importers does not currently appear strong, Brazil needs to accelerate its exports following the record 2022/23 crop to make space for the new crop by Q4 2023. Premiums will come under pressure if import demand fails to pick up in Q3.

Corn: The 2022/23 crop had the highest cost of production on record, and farmers are seeing their margins compressed.

Cotton: Given a weakening global demand trend and a strengthening supply outlook in both the US and Brazil, cotton prices could face additional downward pressure in Q3.

Beef: The resumption of shipments to China and the slowdown in the slaughter of females increased slaughter demand for new batches and should favor live cattle prices.

Orange Juice: OJ prices are likely to remain elevated in Q3 2023 as global demand faces an uncertain recovery. Lower demand in the EU and US as a result of high prices must be monitored.

Dairy: A gradual recovery in milk production and higher imports should help lower domestic dairy prices and allow consumption to gradually recover in 2H 2023.

Pulp: After a pause, pulp prices could see additional downward pressure in Q3 2023 due to supply growth and weaker demand in East Asia and other important regions.

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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,Packaging & Logistics
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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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