Prospects for agribusiness in 2020.
16 de March de 2020
Currently, Brazilian agribusiness represents about 25% of our country’s GDP and, according to the perspectives presented by the research departments, the tendency is for this participation to grow in 2020. Some scenarios are quite favorable to agriculture, such as the increased soy production and increased demand for meat.
For MBAgro Consultancy, the perspective is that 2020 will be an exceptional year for agribusiness, taking into account the high price of soybeans, corn and meat in the foreign market. The Confederation of Agriculture and Livestock of Brazil (CNA) predicts a growth of 3% in the Agro GDP compared to 2019. There are still those who are more optimistic, such as the Directorate of Policy and Macroeconomic Studies (DIMAC) of Ipea (Institute of Economic Applied Research) that conducted a study with the IBGE and estimates an increase of 3.2% to 3.7%. Anyway, it is noticeable that there are high expectations regarding the sector’s performance.
Some factors can provide this environment of growth for Brazilian Agribusiness, among them is the trade war between the USA and CHINA, which, according to Alexandre Mendonça of MBAgro Consultancy, this situation “has already hurt American agriculture a lot”, which is why there was an increase a record level of American producers’ indebtedness. In this scenario, there is a real possibility for Brazil to become the largest producer and exporter of soybeans in the world, as a planted area 2.6% greater than in 2019 is expected, totaling a crop of 121.1 million tons.
Another important factor that can influence the good results of the sector, is the African Swine Fever, which has already cut by half the Chinese herd and can cause that Chinese country still loses about 23 million ton of pork in 2020, that number represents 20% of world production.
Such a situation causes the market to put increasing pressure on meat producers, increases demand and therefore increases prices, configuring it as an excellent opportunity for livestock in Brazil.
According to Ipea, one of the major risks to the sector’s performance is the impact of the new Coronavirus, as both soybeans and meat are important items when it comes to exports to China. Soy can be less impacted, as the harvest has already started and the GDP is accounted for by the volume harvested, since the meat can receive a more significant shock, given the greater production dynamics and the actions to contain the virus, such as quarantine of entire cities, which make it difficult to keep containers refrigerated in Chinese ports, as well as the circulation of goods throughout the country. Uncertainties in relation to the Asian market can directly influence the drop in the price of these items, which are the bet for the growth of the Brazilian market.
It is still uncertain whether the results achieved by Agribusiness will in fact be positive, as there are still a series of uncertainties in the market that need to be overcome, especially the Coronavirus that directly affects one of Brazil’s main trading partners. Therefore, it is extremely important to monitor the movements of the domestic and foreign markets in order to antecipate problems and opportunities.