Prices of Brazil’s principal agricultural and livestock products rose in Q1

RIO DE JANEIRO, BRAZIL – The 15 main Brazilian agricultural products rose in price in Q1 2021, compared with the same period last year. The analysis is part of a memo on Agricultural Markets and Prices, released yesterday, April 29th, by the Institute for Applied Economic Research (Ipea), in partnership with the Center for Advanced Studies in Applied Economics ( CEPEA/Esalq/USP) and the National Supply Company (CONAB).

The highest increases in January, February and March 2021 in relation to the first 3 months in 2020 were found in soybeans (94.2%), cotton (66.3%), corn (61.7%), fat cattle (52.4%) and wheat (51%).

Soybeans (4.7%), corn (13.4%), wheat (10.6%), cotton (24%), coffee (21.2%), sugar (4.2%), hydrous ethanol (18.5%), anhydrous ethanol (12.3%), and fat cattle (10.3%) were up compared to the fourth quarter 2020.

On the other hand, the prices of pork (17.5%), chicken (1.9%), eggs (15.6%), milk (6.6%), rice (13.6%), potatoes (10%), oranges (6%), and bananas (15%) dropped compared to the last quarter last year.

According to Ipea, the main agricultural commodities (primary products quoted on international markets) continued to suffer the impact of the exchange rate and the rise in international prices. “For Brazil, the depreciation of the real against the dollar contributed to keeping the prices of commodities even more attractive in local currency,” highlights the analysis, according to which, heated global demand and low stocks contributed to a good part of the rise in international prices.

Nevertheless, the exchange rate also had adverse effects on Brazilian crops that rely on imported raw materials, thereby raising production costs, Ipea points out.

In terms of foreign demand, the survey shows that the volumes exported to China and other Asian countries remained high. As for domestic demand, reduced operation of bars and restaurants, in addition to the potential impacts of the worsening of the pandemic on household income contributed to the drop in domestic prices of rice, milk, vegetables, pork and chicken.

Grains

Soy, Brazil’s main agribusiness product, is expected to set a record export in 2021, with 85.6 million tons, which represents 50% of global soybean sales. Strong foreign demand should continue to put pressure on the domestic price of soybeans – China alone consumes about 31.6% of the world’s harvest.

As for corn, Ipea says that the dry weather has delayed sowing and tends to put upward pressure on prices. A favorable scenario is expected in the second semester, if the weather contributes to the development of the second harvest.

With respect to rice, consumption is expected to pick up in the second quarter, after lower-than-expected sales in the first months of the year.