Brazil’s agribusiness to be impacted by corona virus

It is expected that the large number of coronavirus cases in the European Union will have an impact on Brazilian agribusiness, as the regional bloc is one of Brazil’s the main trading partners.  Demand for food such as meat from the bloc was growing this year, but now consultants and entities expect it to drop.

Meat

According to Rafael Ribeiro of Scot Consultoria, “With the social isolation policy being enforced in Europe, demand for meat should fall in the next two or three months, or whilst the crisis lasts. With the reduction in volume, there may be a downward price renegotiation”. With European Union countries out of action, China, which has already gone through the most acute phase of the crisis caused by the new coronavirus and is resuming its routine, may request a renegotiation of contracts. “There will certainly be an impact in the medium term, but also a resumption of consumption in the second half,” he says.

Orange juice

CitrusBR, which represents the Brazilian orange juice exporting industry, said that shipments to the European Union are normal and that during the coronavirus crisis in China in recent months, orange juice consumption even increased in the country. This is because the drink is rich in vitamin C, a nutrient that helps fight the flu.

Grains

According to consultant Carlos Cogo, based on the figures for the first two months of this year grain exports have not yet been affected by the advance of the pandemic. According to him, there were no major impacts on commodity trading so far, and a fall in shipments in January and February is due to climatic problems faced during the 2019/2020 harvest.

“The fall in exports of soybeans and corn is due to internal issues such as a delay in the harvest, not because of Covid-19. The shipments took place, the goods have been dispatched and the customs process for entry of these goods is a problem to be solved by the importing country ”, says Cogo.

In Cogo’s view, corn exports should resume in the second half after the second harvest. He affirmed that the Chinese are increasing imports from Brazil as it is their main supplier of agricultural products. “If the vessel problem persists, it may create a problem for the 20/21 harvest. Nothing is official yet, but there may be some impact on the value and speed of supply. Some producers are already concerned , but we still have the entire second semester ahead of us”, he pointed out.

Cotton and sugar-energy sector

The director of consultancy MB Agro, José Carlos Hausknecht, commented that sugar and ethanol as well as cotton production chains should feel the effects of the coronavirus pandemic more acutely in relation to other segments of agribusiness. According to him, these segments should suffer from reduced demand more than food segments. “Food would be less affected because the population needs to consume it in some way. Obviously, there are some changes in consumption patterns. Each place will have a different culture ”, he noted.

The consultant explained that the sugar, ethanol and cotton sectors are more closely linked to the oil market, which has suffered a sharp drop in prices in recent weeks. Hence, in addition to being affected by the pandemic, these sectors were affected by the impasse between Saudi Arabia and Russia regarding adjustments to oil production.

“Ethanol prices fall because of gasoline. And the price of sugar has also dropped. With cotton, consumption normally falls due to low economic growth. But there is competition with synthetic fibers, which are affected by this situation ”, he says.

Source: Globo Rural Magazine

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