Brazil’s Agricultural Sector Poised for Rebound: Record Grain Harvest Expected

The Brazilian agricultural sector is showing signs of recovery, with experts predicting a record-breaking soybean harvest for the upcoming season.

Marcela Marini, an analyst at Rabobank, estimates soybean production will reach 167 million tons, a 9% increase from the previous year.

Soybean prices in Chicago have dropped 22% this year. However, they have risen 8% in Brazilian reais due to currency depreciation.

Daniel Furlan Amaral from the Brazilian Vegetable Oil Industry Association (Abiove) suggests an even higher production potential of 168-172 million tons.

Amaral expects exports to range between 100-104 million tons in 2025. Domestic processing for meal and oil production is projected to be 56-60 million tons.

The outlook for meal exports is optimistic, while the oil market may benefit from increased biodiesel blending. The National Supply Company (Conab) reports favorable weather conditions for a record harvest.

Climate models indicate a possible short, moderate La Niña event. The National Meteorology Institute (Inmet) predicts below-average rainfall for much of the country, especially in the Northeast.

Agribusiness in Brazil

Sérgio Vale, chief economist at MB Associados, projects that agribusiness will significantly contribute to GDP formation in 2025.

This is mainly due to an expected 8% increase in grain production. Vale anticipates an improving trend for the sector in 2025, assuming currency depreciation continues and higher production is confirmed.

Data from the first half of this year showed a 3.5% decrease in GDP in terms of gross income. However, there was a 2.9% increase in volume, according to the methodology used by the Brazilian Institute of Geography and Statistics (IBGE).

Maciel Silva from the Brazilian Confederation of Agriculture and Livestock (CNA) states that the agribusiness GDP performance will depend on prices and beef cattle production.

Livestock and Crop Outlook

The livestock GDP jumped 15% in the first half of the year in real income terms. Silva expects a small decline in GDP for the 12 months of 2024.

However, he projects a reversal in the downward trend for 2025 due to potential production increases, especially in grains. The economic results in agribusiness are expected to vary across different sectors.

Rabobank analysts predict soybean operating margins will decrease from 40% in 2024 to 30% in 2025. Corn profitability is expected to drop from 8% to 4%.

Analysts estimate coffee crop margins for the current season at 47%, exceeding the five-year average of 31%. The cattle cycle turnaround, expected by some analysts for 2025-2026, may already be underway.

Maurício Nogueira Palma from Athenagro anticipates a 25% increase in average arroba prices next year, reaching around R$ 318 ($55.79). Soybean planting for the 2024/25 cycle had reached 67% of the expected area by early November, according to Agroconsult.

This is ahead of last year’s 60% and the five-year average of 63%. Conab’s October survey predicts a new record for grain production in the current season, around 322.53 million tons.