Brazil Agribusiness Quarterly Q3 2020
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.
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Brazil’s seven-day moving average of Covid-19 fatalities has shown a downward trend more clearly, approaching mid-May levels. As a result, mobility indicators and high-frequency activity data have recovered much of the declines resulting from the economic halt and are close to pre-pandemic levels.
A devalued BRL has boosted farmer selling of soybeans for the 2020/21 season, while corn producers have been unwilling to sell in the spot market, even with the entry of the second crop corn supply.
Sugar exports have been brisk, reaching close to 7m metric tons in July/August. Domestic ethanol consumption continues to recover gradually, with prices at levels similar to a year ago.
Beef exports continue to be guided by strong Chinese demand. The extension of the financial aid package until the end of the year will bring greater support to live cattle prices in both the physical and the future markets.
Though social distancing measures implemented in March led to a sharp contraction of activity in Q2 2020, the government’s steps to smooth socioeconomic impacts have moved Brazil closer to the group of countries less economically hit by Covid-19. For the second half of 2020, we expect a gradual recovery, but the lack of a vaccine, concerns over a worsening fiscal outlook, and deterioration of the labor market reduce the likelihood of a ‘V-shaped’ recovery for the broad economy.
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Where to go from here
Andy DuffHead of RaboResearch Food & Agribusiness - South America; Global Strategist - Sugar Read more
Matheus AlmeidaSenior Analyst – Farm Inputs Read more
Wagner YanaguizawaAnalyst - Animal Protein Read more
Guilherme MoryaAnalyst - Beverages Read more
Andrés PadillaSenior Analyst - Beverages, Dairy, F&A Supply Chains Read more
Victor IkedaSenior Analyst - Grains & Oilseeds Read more