Brazil Agribusiness Q4 2018
We believe that grains production growth will slow over the next five years, after record production of corn and soybeanin recent years owing to base effects. Growth prospects for livestock look generally positive, despite a series of ongoing scandals.Livestock exports will remain elevated as global demand steadily remains on an uptrend. Cocoa yields will recover, as productioncompletes its shift from Bahia to the northern state of Pará. Lastly, we expect to see sugar cane being diverted towards ethanolrather than sugar, as the government introduces an ambitious biofuel support policy in 2018/19. Finally, although the outcome ofBrazil's general elections to be held in October 2018 is highly uncertain at this point, we believe agricultural policies will revolvearound six key topics, namely fuel policies, the question of freight costs, fiscal support to agribusiness, a potential clamp down oncorruption, environmental policies, and the exchange rate.
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