Brazil Agribusiness Report Q2 2016 - New Market Research Report

We believe that grains production growth over the next five years will slow relative to the preceding five. Soybean production will outpace that of corn, as lower production costs for soybean relative to corn will make the commodity more attractive to grow. However, we see limited growth out to 201 9 / 20 given the scarcity of area available for expansion , as well as high import costs for fertilisers. We hold a more positive view on the sugar industry now than we have held in the past, due to reforms in the ethanol sector and the significant depreciation in the real over the past several months. Real weakness will be a net positive for the country's agricultural sector.

Key Forecasts

Soybean average production growth 2015/16 to 2019/20: 1.9% to 106.0mn tonnes. We see limited growth out to 2019/20 given the scarcity of area available for expansion, as well as high import costs for fertilisers.
Poultry average consumption growth to 2020: 3.6% to 11.1mn tonnes. Brazilian poultry consumption will outperform the country's general livestock complex over the coming years, particularly beef which will suffer from the poor economic environment.
Beef average production growth to 2019/20: 2.3% to 10.6mn tonnes. Beef production growth will strengthen as more cattle come online and beef producers are induced to supply growing export markets.
Milk average production growth to 2018/19: 4.1% to 41.9mn tonnes. Efficiency gains in the sector and growing export opportunities will boost output.
2016 real GDP growth: -4.0% (down from -3.8% in 2015).
2016 consumer price inflation: 9.5% average (up from 9.0% in 2015).

Full Report Details at
- http://www.fastmr.com/prod/1132618_brazil_agribusiness_report_q2.aspx?afid=301

BMI universe agribusiness market value: 0.4% y-o-y increase to USD222.7bn in 2016, forecast to increase by an average of 3.6% annually between 2015/16 and 2019/20.

Industry Outlook

Corn production will decline in the upcoming 2015/16 season as farmers turn more towards soybean given its cheaper production costs and higher price. Domestic corn consumption will see weaker growth in 2016 due to elevated prices caused by strong exports and solid demand from the livestock sector, particularly pork and poultry. Export opportunities to Asia, particularly Vietnam and China, will remain strong to 2020.

Brazilian 2016/17 coffee production will remain constrained by a poor robusta crop due to excessive dryness in Espirito Santo, as in 2015/16. Domestic consumption growth will be limited due to the poor economic environment and the already elevated penetration rate. On the other hand, a weak real will support exports from Brazil despite subdued global prices in 2016.

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