Brazil Farm Economy to Rebound in 2017

December 19, 2016 09:06 AM

Brazil’s farm economy will rebound in 2017 with a record harvest pushing up grain exports and expanding the country’s livestock industry, according to analysts’ forecasts.

An estimated record grain harvest of 213.1 MMT would be 14% larger than last year, when crops were devastated by drought, according to Brazil government estimates. The harvest will start in January.

“Contrary to the Brazilian economy, agribusiness points to a positive performance in 2017 because of the improved agriculture revenue. We have relatively stable prices ahead … and we have increased grain production," the managing partner of MacroSector, Rabo Silveira told Reuters.

According to another Brazilian marketing firm, SAFRAS & Mercado, Brazilian soybean production in 2016/17 could increase by 9.2% to 106.085 million tons, according to news reports. That would be roughly 4 MMT higher than USDA’s estimates.

In its largest supply and demand report Dec. 9, USDA raised Brazil’s estimated corn harvest 3 MMT to 86.3 MMT, but left soybean production unchanged from November at 102 MMT. USDA also left Argentina’s corn and soybean production unchanged, at 36.50 MMT and 57 MMT, respectively.

 “Agribusiness has a very good scenario for a year in which the economy of the country will go sideways. It is not that agribusiness will be immune, but it has some rules of its own,” Silveira says.

Poultry producers project a production increase of 3 to 5 percent, and pork producers of 2 percent, according to the Brazilian Animal Protein Association, partly because of a larger projected supply of corn, a staple of animal feed.

However, despite increased crop production uncertainties about the exchange rate, the national economy and politics could negatively impact the farm economy, according to some agribusiness leaders.

“The most difficult factor for 2017 is the unpredictability," Cario Carvalho, the president of the Brazilian Agribusiness Association, told Reuters.

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