Chinese embargo hinders livestock planning for 2022

The “China factor” remains decisive for Brazilian livestock prospects in 2022. With the domestic market weakened by the economic crisis and exports of almost 16% of beef production held back because of the Chinese embargo, the scenario, further complicated by rising costs and disincentives to investments – it is more challenging, say experts.

For Thiago Bernardino de Carvalho, a researcher at Cepea/Esalq/USP, the trend is for costs to continue to rise in the first half of 2022 – the prices of medicines and nutrition should rise up to 5%, he believes – and dissipate throughout the year. According to him, those who invest are able to dilute expenses and have economies of scale.

“It’s not to be crazy, but you can’t let the car stop. If everyone leaves, the confinement tends to be positive,” he said at an event organized by the Confederation of Agriculture and Livestock of Brazil (CNA). The researcher said it is necessary to look at the farm as a company that can face a “scenario of uncertainties” if there is good cost management and sales of cattle.

The executive director of the consulting firm Agrifatto, Lygia Pimentel, sees a reduction in margins for ranchers. Since 2017, the sector no longer lives “normal years”, she said, and China’s pullback increased the volatility of the grain market for livestock. “It’s a challenging market. China’s absence will hurt, as we are subject to the international market and the domestic market is depressed because of the economic crisis,” she said.

Thiago Carvalho, from USP, adds: “The China factor was what was pricing the market and giving encouragement to the cattle breeder. If China returns and the market settles, there will be investments”.

Source: Valor Econômico

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