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Brazil Agribusiness Report Q2 2009Published by: Business Monitor International Published: Apr. 24, 2009 - 67 Pages Table of Contents
AbstractIn BMI's Brazil Agribusiness Report for Q2 2009, we introduce the new Business Environment section.This section gives an overview of agriculture in Brazil and its significance to the overall economy andlabour market. We also cover support given to agriculture by the government.The value of Brazil's agricultural sector grew through the first three quarters of 2008, as prices for majoragricultural commodities rose. In the final quarter of the year, however, growth turned negative ascommodity prices came back down to earth. This trend will continue into 2009 as prices remain subdued.With the slowdown in world demand, we have revised down many of our forecasts for production growthin 2009. We now expect production of poultry, pork and beef to fall this year. However, over our forecastperiod to 2013, we still expect strong growth in livestock and poultry production as demand picks backup. Tumbling prices are not the only factors causing us to predict falling production in 2009. Dry weather hascaused yields of grain crops to fall, and we expect the harvest of corn and wheat to be down significantlyon 2008 levels, with corn production forecast to fall 13.3% year-on-year (y-o-y) to 50.80mn tonnes.Again though, over our forecast period, we expect to see strong growth of 20.3%. Consumption of cornwill also grow rapidly, driven by demand from the livestock sector. One crop for which prices are still buoyant is cocoa. The International Cocoa Organization is forecastinga cocoa deficit of 193,000 tonnes for 2008/2009 and prices have risen rapidly since the start of 2009.However, cocoa production in Brazil is still stuck in the doldrums with production forecast to fall 5.3% yo-y in 2009 to 162,000 tonnes - well under half the level seen in the late 1980s. While we expectproduction to increase gradually over our forecast period, unless the government increases its effort tohelp farmers rejuvenate their plantations, then we do not see production coming even close to its formerheight. One bright spot for Brazil's agricultural sector is the rapid depreciation of the real against the US dollarsince mid-2008, which will increase the competitiveness of Brazil's products on the export market. Up tolast year, the real had been on an appreciatory trend since 2004 and its strength was hurting exports. Thereal has weakened from around BRL1.60/US$ in August 2008 to around BRL2.40/US$ in March 2009. BMI forecasts the unit to drop to BRL2.60/US$ by the end of this year. This will help compensateBrazilian producers for the falling world commodity prices. Get Full Details About This Report >> |
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