MONTHLY AGRIBUSINESS BRAZILMONTHLY AGRIBUSINESS … · The latest global figures support our...

The slowdown In Brazilian economic activity has become more intense in the second quarter. In fact all the

economic signals remain weak, pointing to GDP shrinkage of 1.2%, following the 0.2% reduction in the first three

months of the year, compatible with our forecast of an annual GDP decline of 1.7% this year. In this context, it is

particularly worth noting the high level of industrial inventories, low business and household confidence and the

deterioration in the job market (with increasing unemployment and slowing wage gains), which should impose

limits on a more pronounced upturn in activity from now on. In addition, consumer inflation closed the first quarter

under extreme pressure, and given that this upward tendency is still present, we have revised our forecast for the

IPCA consumer price index, which we now expect to record 8.8% in 2015 and 5.2% in 2016. We expect the

benchmark Selic interest rate to close the current year at 14.25%, given the recent signals from the Central Bank

suggesting that it will continue with its monetary tightening cycle and raise the rate by another 0.50 p.p. at its next

meeting, whose decision will be disclosed on July 29. We have also adjusted our projections for the exchange

rate, which we now expect to reach R$/US$3.20 at year-end. Finally, the fiscal adjustment still depends partially

on the political scenario. Nevertheless, we are maintaining our estimate of a primary surplus equivalent to 1.2%

of GDP, given the measures to increase revenue and reduce spending already in place and the healthy

performance of the regional governments’ finances.

The latest global figures support our expectation that global GDP growth in 2015 will be slightly lower than last

year (3.1%, versus 3.4% in 2014). The Chinese economy remains weak and we expect second-quarter GDP

growth to fall behind the 7% target. Following frustration with the U.S. economy's performance in the first three

months of the year, we note a certain recovery this quarter, sustaining expectations of an upturn in interest rates

in the months ahead. In any event, we are maintaining our belief that the Fed will begin normalizing monetary

policy in September. Finally, following substantial growth at the beginning of the year, the European economy is

beginning to settle, led by Germany. More recently, concerns have been mounting over Greece possibly

defaulting on its debt. In addition, the slower pace of the Chinese economy represents a substantial downward

risk at the same time as market attention will continue to be centered on the activities of the central banks.

June 2015 Macroeconomic Research Department

Macroeconomic Outlook

MONTHLY AGRIBUSINESS BRAZIL MONTHLY AGRIBUSINESS BRAZIL

Executive Summary

Soybeans

Prices should remain low, reflecting the high global stocks to use ratio which now stands at 30.5%. Volatility

should continue in the months ahead in line with the development of the U.S. and Asian crops, which should be

affected in opposite ways by El Niño.

Corn

The increase in Brazil’s 2nd corn crop and the high stocks to use ratio should keep prices down, albeit with a

degree of volatility in the coming months due to the diverse effects of El Niño on the U.S. and Asian crops, which

are still in the development stage.

Coffee

Prices should remain volatile, reflecting concerns over the impact of El Niño on the crop in the Southeast. The

consequent reduction in Brazilian production estimates should favor a price upturn.

Cattle

Prices should continue on their seasonal upward trajectory in the coming months due to the arrival of the dry

weather and the limited supply of animals ready for slaughter. However, the slowing of domestic demand and

the decline in export volume should result in downward pressure.

Sugar and Ethanol

Sugar prices should continue to recover, reflecting the tighter adjustment of global supply, but without significant

increases, given that global stocks are still high. Ethanol prices should remain high thanks to increased

consumption to the detriment of gasoline.

Macroeconomic Research Department

15.39419.419

25.934 26.160

31.370 32.345

41.917

52.01849.989

55.027

60.01857.162

68.688

75.324

66.383

81.499

86.121

96.045

8.000

17.000

26.000

35.000

44.000

53.000

62.000

71.000

80.000

89.000

98.000

107.000

90

/91

91

/92

92

/93

93

/94

94

/95

95

/96

96

/97

97

/98

98

/99

99

/00

00

/01

01

/02

02

/03

03

/04

04

/05

05

/06

06

/07

07

/08

08

/09

09

/10

10

/11

11

/12

12

/13

13

/14

14

/15

*

em mil toneladasFonte e Projeção: CONAB

Elaboração: BradescoProdução Nacional de Soja 1990 - 2012

2

SO

YB

EA

NS

Soybean – Prices should remain low, reflecting the high global stocks

to use ratio. Volatility should continue in the months ahead in line with

the development of the U.S. and Asian crops, which should be affected

in opposite ways by El Niño

Fundamentals

The USDA’s 2nd 2015/16 harvest survey showed no relevant change in its production estimate, but global

stocks were revised downwards, in return reducing the estimated stocks to use ratio to 30.5%, versus

31.6% in the previous month. U.S. production volume expectations were cut by 3%, from 108 to 105

million tonnes, while Brazil’s were increased by 2.6% to 97 million tonnes. However, global output should

remain flat over the previous season, although stocks still remain high.

Conab’s ninth 2014/15 harvest survey indicated an upward revision of soybean harvest volume for the

third consecutive month, due to the expected increase in planted area. Production is expected to reach 96

million tonnes, a new record: almost a million tonnes up on the previous month’s estimate and 11.5% more

than in the harvest before.

The meteorology services confirmed the arrival of a moderate to weak El Niño in the second semester,

bringing above-average rainfall in July and August and normal levels in September and October, benefiting

the U.S. soybean crop and Brazil’s 2nd corn crop, and leading to drier weather in Asia. However, given

that the phenomenon is not expected to be strong, the Asian grain harvest should not be unduly affected,

helping keep prices down.

Estimates of healthy harvests in the U.S. and Brazil should ensure that global stocks remain high. The

global stocks to use ratio is estimated at 30.5%, the highest ever recorded figure, which should also keep

prices down.

Source and Estimate: Conab

Production: BRADESCO

National

production of

soybeans 1991 –

2015 – in ´000 tons

Macroeconomic Research Department 3

Source: Deral

Production and Estimate:

BRADESCO

Soybean producer

price – Paraná

2000 – 2015

in R$ per 60 kg bag

Source: Bloomberg


International soybean prices

(US$ cents/bushel)

2000 – 2015

491

546507

436

632

567

989

526

689

542

757

1.515

908

1.211

1.143

1.674

1.525

1.287

1.486

1.178

965961

400,0

600,0

800,0

1.000,0

1.200,0

1.400,0

1.600,0

1.800,0

jan

/00

jan

/01

jan

/02

jan

/03

jan

/04

jan

/05

jan

/06

jan

/07

jan

/08

jan

/09

jan

/10

jan

/11

jan

/12

jan

/13

jan

/14

jan

/15

PREÇOS INTERNACIONAIS DE SOJA - BOLSA DE CHICAGO - CBOT PREÇO FUTURO 1º VENCTO 2000 - 2010

em US$ cents por bushel

em US$ cents por bushel

Fonte: Bloomberg Elaboração: Bradesco•Projeção de preço: média dos preços futuros

de

z/1

5

Soybean

productivity –

1991 – 2015

in kg per hectare

Source and estimate: Conab

Production: BRADESCO 1.580

2.027

2.1502.221

2.175

2.2992.367 2.395

2.751

2.567

2.816

2.339

2.245

2.419

2.816

2.629

2.927

3.115

2.651

2.938

2.854

3.011

1.500

1.700

1.900

2.100

2.300

2.500

2.700

2.900

3.100

3.300

90/9

1

91/9

2

92/9

3

93/9

4

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

10/1

1

11/1

2

12/1

3

13/1

4

14/1

5*

em kg por ha Fonte e Projeção: Conab Elaboração: Bradesco Produtividade da lavoura de soja - 1990 - 2012

18,04

26,63

19,98

43,93

32,42

48,15

22,57

28,62

27,03

44,37

39,81

30,59

45,68

40,14

73,92

50,53

61,83

53,38

58,87

56,58

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

jan

/00

jan

/01

jan

/02

jan

/03

jan

/04

jan

/05

jan

/06

jan

/07

jan

/08

jan

/09

jan

/10

jan

/11

jan

/12

jan

/13

jan

/14

jan

/15

SOJA EM GRÃO PREÇO AO PRODUTOR - PRAÇA PR

em R$ por saca de 60 kg Fonte: Deral PR Elaboração e Projeção: Bradesco

de

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5


CO

RN

Corn – The increase in Brazil’s 2nd corn crop and the high stocks to

use ratio should keep prices down, albeit with a degree of volatility in

the coming months due to the diverse effects of El Niño on the U.S.

and Asian crops

Fundamentals

The USDA’s 2nd survey of the 2015/16 harvest increased its estimate of Brazilian stocks by 3.0 million

tonnes, in turn pushing up the stocks to use ratio from 19.4% to 19.7% in comparison with the previous

month. The U.S. harvest is estimated at 346.2 million tonnes, 4.1% down on the season before, and the

Brazilian crop at 75 million tonnes, 3.8% down on the 78 million tonnes recorded last year. Despite the

decline in production, global stocks remain high.

Conab’s ninth 2014/15 harvest survey indicated an upward revision of the 1st corn crop for the third

consecutive month and, for the first time, an increase in the 2nd crop estimate, due to the expected upturn

in planted area. The 1st crop is estimated at 30.8 million tonnes, 0.4% more than the previous month’s

estimate, and the 2nd crop at 49.4 million tonnes, up by 3.1% on the month before, indicating a 2% upturn

in the final harvest. Production is expected to reach 80 million tonnes.

The effects of El Niño, which should result in above-average rainfall in July and August and normal levels

in September and October, benefiting the U.S. crop and the 2nd Brazilian crop, which is currently in the

harvesting stage. In Asia, the phenomenon may result in drier weather and a possible poor harvest.

However, the meteorologists believe this El Niño will be moderate or weak, minimizing the risk of a

harvest shortfall.

We expect a certain amount of price volatility in the coming months, due to the diverse effects of El Niño

on the U.S. and Asian crops, which are still in the development stage. However, prices should settle at

lower levels, in response to the high global stocks to use ratio and the increase in Brazil’s 2nd crop.

Source and estimates: Conab


Domestic corn

production 1991 –

2015 in ´000 tons

24.096

30.77133.174

37.44235.716

32.393

42.290

35.281

47.411

42.129

35.007

42.515

51.370

58.652

51.004

56.01857.407

72.980

81.506 80.05280.209

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

90

/91

91

/92

92

/93

93

/94

94

/95

95

/96

96

/97

97

/98

98

/99

99

/00

00

/01

01

/02

02

/03

03

/04

04

/05

05

/06

06

/07

07

/08

08

/09

09

/10

10

/11

11

/12

12

/13

13

/14

14

/15

*

em mil toneladas Fonte e Projeção: ConabProdução Nacional de Milho - 1991 - 2012


Corn productivity

– in kg per hectare

1991 – 2015



Source: Deral

Production and Estimate:

BRADESCO

Corn producer price

– Paraná

2000 – 2015

in R$ per 60 kg bag

Source: Bloomberg


International Corn prices

(US$ cents/bushel)

2000 – 2015

217

235

267

215

316

237

413

326

493

711

418

322

347

546

753

603

763

662

439

502

335

381

160

260

360

460

560

660

760

860

jan

/00

jan

/01

jan

/02

jan

/03

jan

/04

jan

/05

jan

/06

jan

/07

jan

/08

jan

/09

jan

/10

jan

/11

jan

/12

jan

/13

jan

/14

jan

/15

Milho - Bolsa de Chicago - CBOTPreço futuro 1º vencimento

Em US$ cents por bushelFonte: Bloomberg Elaboração e Projeção: Bradesco

de

z/1

5

11,95

7,05

11,40

22,28

18,96

16,26

10,44

14,14

24,94

13,07

19,96

26,92

17,26

23,29

17,84

19,41

5,0

10,0

15,0

20,0

25,0

30,0

jan

/00

jan

/01

jan

/02

jan

/03

jan

/04

jan

/05

jan

/06

jan

/07

jan

/08

jan

/09

jan

/10

jan

/11

jan

/12

jan

/13

jan

/14

jan

/15

Preço pago ao produtor de milho - Paraná Fonte: DeralElaboração e Projeção:

Em R$ por saca de 60 kg Fonte: DeralElaboração e Projeção:

Em R$ por saca de 60 kg

de

z/1

5

1.791

2.1942.3492.344

2.622

2.356

2.5882.6502.5892.480

3.260

2.864

3.585

3.296

2.867

3.279

3.655

3.972

3.599

4.3114.158

4.808

5.1495.057

5.181

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

5.500

90

/91

91

/92

92

/93

93

/94

94

/95

95

/96

96

/97

97

/98

98

/99

99

/00

00

/01

01

/02

02

/03

03

/04

04

/05

05

/06

06

/07

07

/08

08

/09

09

/10

10

/11

11

/12

12

/13

13

/14

14

/15

*

em kg por ha Produtividade - Milho - 1991 - 2012


Fundamentals

This month, Conab published its 2nd survey of the 2015/16 coffee crop, currently in the harvesting phase,

pointing to total production of 44.25 million 60 kg bags, 2.4% down on the previous season due to the

lack of rainfall in the Southeast. Conillon output is estimated at 11.34 million bags, 13% less than in the

previous harvest, while arabica production is expected to reach 32.91 million bags, up by 1.9% in the

same period, even though the current harvest is the lower of the two-year cycle. The arabica upturn is

chiefly due to: (i) the recovery of output in Paraná, which had been badly hit by frosts last year; and (ii)

the inversion of the two-year cycle in the Zona da Mata region of Minas Gerais. However, production in

the other producing regions, such as São Paulo and the Minas Gerais cerrado (savannah), is expected to

drop by 16.4% and 12.5%, respectively. In comparison with the January survey, production estimates

have been revised down by 1.6%, led by São Paulo and Bahia, both jeopardized by poor rainfall, with

downward revisions of 10.7% and 16.7% respectively.

The NOAA, the U.S. meteorology service, confirmed the occurrence of El Niño in the second half of the

year, implying increased rainfall in Brazil’s Center-South region and drier weather in Asia. Consequently,

the phenomenon may benefit coffee production in Brazil and lead to poor harvests in Vietnam and

Indonesia, impossible to quantify as yet, which jointly account for 26% of global output and 30% of

exports.

Prices should remain volatile in the coming months, with attention centered on the development of the

Brazilian harvest and the effects of El Niño on the crops. Conab’s survey, indicating a reduction in

production estimates, should give prices a boost.

6

CO

FF

EE

Domestic coffee

production – 1994 – 2015

in ´000 60 kg bags



26.000

16.800

27.500

18.860

34.547

27.170

31.100

28.137

48.480

28.820

39.272

32.944

42.512

36.070

45.992

39.470

48.095

43.484

50.82649.152

45.34244.284

11.000

21.000

31.000

41.000

51.000

61.000

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

10/1

1

11/1

2

12/1

3

13/1

4

14/1

5

15/1

6*

Fonte e projeção (*): Conab Elaboração: BradescoProdução Nacional de Café - 1994 - 2012mil sacas de 60 kg

Coffee – Prices should remain volatile, reflecting concerns over the

impact of El Niño on the crop in the Southeast. The consequent

reduction in Brazilian production estimates should favor a price upturn


Source: Bloomberg


International Coffee

Prices 2000 - 2015

In US$ cents/ Lb

Source: BMF BOVESPA Production: BRADESCO

Arabica coffee – São

Paulo 2000 – 2015

in US$ per 60 kg bag

115,06

63,07 65,95

67,78

99,48

127,53

96,55

131,18

152,04

108,67

142,45

204,99

272,07

180,03

150,03

117,62

197,02

134,72138,60

25,0

75,0

125,0

175,0

225,0

275,0

325,0

jan

/00

jan

/01

jan

/02

jan

/03

jan

/04

jan

/05

jan

/06

jan

/07

jan

/08

jan

/09

jan

/10

jan

/11

jan

/12

jan

/13

jan

/14

jan

/15

Projeção de preço: média dos preços futurosCafé em grão - Bolsa de Nova York - NYBOT

2000 - 2010Em US$ cents por libra peso

Fonte: Bloomberg Elaboração:

de

z/1

5

223,6

104,4

239,8

337,0

230,4

291,4

245,8

269,8

247,5

282,2

328,0

530,8

457,8

387,5

408,6

247,7

366,3

541,8

90,0

140,0

190,0

240,0

290,0

340,0

390,0

440,0

490,0

540,0

590,0

jan

/00

jan

/01

jan

/02

jan

/03

jan

/04

jan

/05

jan

/06

jan

/07

jan

/08

jan

/09

jan

/10

jan

/11

jan

/12

jan

/13

jan

/14

jan

/15

Café Arábica - Preço ao Produtor - Praça São Paulo 2000 - 2012Em R$ por saca 60 kg Fonte: Cepea EsalqElaboração e Projeção: Bradesco

de

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Fundamentals

In the year through May, beef exports fell by 20% over the same period last year, with declines in the

volumes shipped to the main destinations of Russia (-37%), Venezuela (-51%) and Iran (-23%), reflecting

the impact of the slide in oil prices on the economies of the oil-producing countries. In addition, the

devaluation of the Russian currency made beef imports more expensive in that country.

Domestic meat consumption is beginning to show signs of slowing, reflecting the deterioration in the job

market, bringing wholesale beef prices down for the second consecutive month.

The supply of animals ready for slaughter will remain tight, due to the slaughter of females in previous

years, leading to an increase in bull-calf prices. According to Mapa, the slaughter rate in the first four

months fell by 10% over the same period last year. Bull-calf prices climbed by slightly more than 40% in

2014 and have increased by a further 19% since the beginning of the current year.

El Niño should lead to more regular rainfall in Brazil’s Center-South, benefiting pasture.

In line with seasonality, cattle prices should remain high in the coming months, reflecting the restricted

supply of animals ready for slaughter and the arrival of the dry autumn/winter weather. However, the

decline in exports and the slowing of the domestic market, which absorbs 80% of total beef demand,

should exert downward pressure on prices.

8

BE

EF

Brazilian beef

exports (in tons)

2012 – 2015

Source: SECEX


70.893

101.746104.974

139.110

127.236

120.133

60.000

70.000

80.000

90.000

100.000

110.000

120.000

130.000

140.000

150.000

jan fev mar abr mai jun jul ago set out nov dez

Exportações Brasileiras de carne bovina - 2010 - 2012 - Em toneladas Fonte: Secex Elaboração: Bradesco

2012

2013

2014

2015

Cattle – Prices should continue on their seasonal upward trajectory in

the coming months due to the arrival of the dry weather and the

limited supply of animals ready for slaughter. However, the slowing of

domestic demand and the decline in export volume should result in

downward pressure


Live cattle –

producer price –

São Paulo – 2002

– 2015

in R$ per arroba

Source: Cepea


2.294

2.256

2.485

2.2312.161

1.911

1.600

1.700

1.800

1.900

2.000

2.100

2.200

2.300

2.400

2.500

2.600

jan fev mar abr mai jun jul ago set out nov dez

Abates mensais de boi - 2010 - 2012 - Em toneladas Fonte: Secex Elaboração: Bradesco

2013

2014

2015

Slaughter Cattle in

thousand heads

2012 - 2015

Source : MAPA

Production : BRADESCO

42,2

51,7

61,8

93,3

74,5

109,6106,9

90,897,0

108,4

125,2

143,2

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

jan

/02

jan

/03

jan

/04

jan

/05

jan

/06

jan

/07

jan

/08

jan

/09

jan

/10

jan

/11

jan

/12

jan

/13

jan

/14

jan

/15

BOI GORDO PREÇO AO PRODUTOR - PRAÇA SP

Em R$ por arroba (15 kg)Fonte: Cepea EsalqElaboração e Projeção: Bradesco

de

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5


Sugar cane production

1991 - 2015

in ´000 tons



222.429 223.460240.944

287.810

314.969

257.592

320.650

359.316

431.413

474.800

559.432

604.514623.905

560.364

588.916

658.822

634.767654.613

150.000

250.000

350.000

450.000

550.000

650.000

90

/91

91

/92

92

/93

93

/94

94

/95

95

/96

96

/97

97

/98

98

/99

99

/00

00

/01

01

/02

02

/03

03

/04

04

/05

05

/06

06

/07

07

/08

08

/09

09

/10

10

/11

11

/12

12

/13

13

/14

14

/15

15

/16

*

mil toneladasProdução Nacional de Cana-de-Açúcar - 1990 - 2013

Fonte e projeção : Conab Elaboração. Bradesco

Fundamentals

The most recent surveys of the 2015/16 crop point to an increase in sugarcane production, favored by

improved rainfall in the Southeast. Conab estimates output of 592.7 million tonnes, 3% up on the

previous harvest, while Unica estimates 590 million tonnes, up by 3.3%. Conab’s next survey will be

published in mid-August.

In May, the USDA estimated a 1.3% rise in global sugar consumption and a 0.5% decline in ethanol

output, contributing to an improved adjustment of supply and demand. As a result, the stocks to use ratio

should fall from 26% to 23.4%, favoring a gradual international price recovery.

The arrival of El Niño in the coming months may benefit the sugarcane crop by increasing yield; on the

other hand, excess rainfall could prove prejudicial. In addition, El Niño may result in drier weather in Asia,

leading to poor harvests in India and Thailand, which jointly account for almost 25% of global sugar

production.

The beginning-of-year increase in gasoline prices led to a 3.7% year-on-year reduction in its

consumption in the first four months, favoring ethanol, whose consumption grew by 32.6% in the same

period.

The tighter global supply adjustment reported by the USDA, with a consequent reduction in stocks,

should fuel an increase in international sugar prices. However, we should not expect any significant

upturns, given that global stocks, although better adjusted, are still high. Ethanol prices should remain

high in the coming months, given increased demand to the detriment of gasoline.

10

SU

GA

R

AN

D

ET

HA

NO

L

Sugar and Ethanol – Sugar prices should continue to recover,

reflecting the tighter adjustment of global supply, but without

significant increases, given that global stocks are still high.

Ethanol prices should remain high thanks to increased

consumption to the detriment of gasoline


Source: BMF BOVESPA


International sugar

prices 2000 – 2015

In US$ Cents/ Lb

Source: Bloomberg


Hydrous Ethanol

Prices

2011 - 2015

in R$ per cubic meters

5,6

10,7

9,0 8,8

6,3

9,0

8,4

17,9

8,9

13,1

11,3

28,4

14,6

32,1

21,9

29,5

24,9

17,7

15,4

11,7

13,2

3,0

9,0

15,0

21,0

27,0

33,0

jan

/00

jan

/01

jan

/02

jan

/03

jan

/04

jan

/05

jan

/06

jan

/07

jan

/08

jan

/09

jan

/10

jan

/11

jan

/12

jan

/13

jan

/14

jan

/15

Preços internacionais de açúcar – NYBOT – Preço futuro 1º Vencto 2000 – 2013Fonte: Bloomberg Elaboração: Bradesco

Em US$ cents por libra peso

de

z/1

5

1.062

1.291

1.025

1.146

1.225

1.354

1.150

1.136

1.076

1.316

1.192

1.160

1.330

910

1.010

1.110

1.210

1.310

1.410

1.510

jan

/12

fev/1

2m

ar/

12

ab

r/12

mai/1

2ju

n/1

2ju

l/12

ag

o/1

2set/

12

ou

t/12

no

v/1

2d

ez/

12

jan

/13

fev/1

3m

ar/

13

ab

r/13

mai/1

3ju

n/1

3ju

l/13

ag

o/1

3set/

13

ou

t/13

no

v/1

3d

ez/

13

jan

/14

fev/1

4m

ar/

14

ab

r/14

mai/1

4ju

n/1

4ju

l/14

ag

o/1

4set/

14

ou

t/14

no

v/1

4d

ez/

14

jan

/15

fev/1

5m

ar/

15

ab

r/15

mai/1

5ju

n/1

5ju

l/15

ag

o/1

5set/

15

ou

t/15

no

v/1

5d

ez/1

5ja

n/1

6

em R$ por metro cúbico

Domestic sugar and

ethanol production

1993 – 2015

Sugar in ´000 tons

Ethanol in ´000 liters



11.700

19.380

16.020

27.500

38.168

35.968

37.878

35.560

37.354

12.692

13.078

10.518

14.640

23.007

25.763

27.595

23.640

28.660 29.199

8.000

15.000

22.000

29.000

36.000

43.000

93

/94

94

/95

95

/96

96

/97

97

/98

98

/99

99

/00

00

/01

01

/02

02

/03

03

/04

04

/05

05

/06

06

/07

07

/08

08

/09

09

/10

10

/11

11

/12

12

/13

13

/14

14

/15

15

/16

*

Açúcar em mil toneladasEtanol em mil litros

Fonte e (*) Projeção: Conab Elaboração: Bradesco

Produção nacional de açúcar e de etanol 1993 – 2013

SUGAR

ETHANOL


Harvest follow-up

Non-commercial

holdings and

international

soybean prices

2007 - 2015

Non-commercial

holdings and

international corn prices

2007 - 2015

Non-commercial

holdings and

international

coffee prices

2006 - 2015

Source: Bloomberg


Source: Bloomberg


Source: Bloomberg


-16.898

-56.797

203.215

-28.178

260.845

46.808

168.209

-130.404

-74444

1.628,01.613

913,3

971,0

-160.000

-120.000

-80.000

-40.000

0

40.000

80.000

120.000

160.000

200.000

240.000

280.000

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

May

-08

Au

g-0

8

No

v-0

8

Feb

-09

May

-09

Au

g-0

9

No

v-0

9

Feb

-10

May

-10

Au

g-1

0

No

v-1

0

Feb

-11

May

-11

Au

g-1

1

No

v-1

1

Feb

-12

May

-12

Au

g-1

2

No

v-1

2

Feb

-13

May

-13

Au

g-1

3

No

v-1

3

Feb

-14

May

-14

Au

g-1

4

No

v-1

4

Feb

-15

May

-15

US$ c / bushel em número de contratos

Non-commercial holdings

Soybean price

16-j

un

-09

113.201

-119.389

413.915

80.111

149.456

32.987

-120.333312

764

831

704

321

385

-300000

-200000

-100000

0

100000

200000

300000

400000

500000

150

250

350

450

550

650

750

850

May

-08

Au

g-0

8

No

v-0

8

Feb

-09

May

-09

Au

g-0

9

No

v-0

9

Feb

-10

May

-10

Au

g-1

0

No

v-1

0

Feb

-11

May

-11

Au

g-1

1

No

v-1

1

Feb

-12

May

-12

Au

g-1

2

No

v-1

2

Feb

-13

May

-13

Au

g-1

3

No

v-1

3

Feb

-14

May

-14

Au

g-1

4

No

v-1

4

Feb

-15

May

-15

US$ cents por bushel


Corn prices

46.47850.224

38.200

-3772

139,70

304,9

211,8

159,4

134,5

-30.000

-20.000

-10.000

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

0

50

100

150

200

250

300

350

May

-08

Au

g-0

8

No

v-0

8

Feb

-09

May

-09

Au

g-0

9

No

v-0

9

Feb

-10

May

-10

Au

g-1

0

No

v-1

0

Feb

-11

May

-11

Au

g-1

1

No

v-1

1

Feb

-12

May

-12

Au

g-1

2

No

v-1

2

Feb

-13

May

-13

Au

g-1

3

No

v-1

3

Feb

-14

May

-14

Au

g-1

4

No

v-1

4

Feb

-15

May

-15

Posições Não Comerciais e Preços Internacionais de café - 2007 - 2014 - Fonte: Bloomberg Elaboração: Bradesco


Coffe

16-j

un

-09

US$ c / libra em número de contratos


SO

YB

EA

NS

Soybean Complex

Of soybean grain produced in Brazil, 43% is exported and 57% is destined to milling. The milling process

results in 72% bran and 18% oil. The remaining 10% are seeds and losses. Of bran produced, 50% is

exported and 20% of oil is exported.

Soybean is an exports culture, since the level of production exceeds consumption by around 40%. This

means that any growth of domestic production results in exportable surplus.

In the domestic market, soybean is used in the manufacturing of food, such as salami and sausages and

nearly 80% is employed to produce animal’s food. Soybean accounts for 25% to 30% of poultry and hog

food.

Countries of destination

Grain: 75% China, 25% Europe, 10% other Asian countries.

Bran: 70% Europe, 20% Asian countries.

Oil: 50% China, 20% India.

Seasonality

Summer crop: planting occurs between October and December and harvest is concentrated between

February and May.

Regionalization

Mid-west: 49%, south 33%, 8% northeast, 6% southeast

Ranking

Brazil is the world’s second largest player of production with 30.8%, behind the USA with 31.5%, but it is

the largest exporter with 40.7%, followed by USA with 39.3%.

Source: Usda


World ranking of

the soybean

complex 2011 –

2012 harvest

Snapshot of the market

13

Ranking Production Export Production Export Production Export

US 35,5% 44,2% 20,2% 14,0% 20,6% 12,9%

Brazil 26,4% 32,0% 15,1% 22,9% 15,8% 16,2%

Argentina 19,8% 12,8% 17,2% 49,3% 17,7% 54,6%

China 5,6% 0,0% 25,8% 0,0% 24,6% 0,0%

Grains Meal Oil


Corn is the basis of animal’s food for main types of breeding. In the animal’s food composition, corn accounts

for:

64% in poultry raising

65% in hog raising

23% in dairy cattle


Corn exports account for 28% of volume produced. Main markets of destination are 14% Japan, 13%

South Korea, 8.5% Taiwan.

Seasonal factors

Corn has two crops:

Summer crop: planting occurs between October and December and harvest is concentrated between

February and May. It represents 40% of total harvest. It has the following regional distribution: 45% south,

26% southeast, 10% mid-west, 15% northeast.

Winter crop: planting occurs between February and June and harvest is concentrated between July and

November. It accounts for 60% of total crop. It has the following regional distribution: 64.3% mid-west,

23% south (only in Paraná), 6% northeast (only in Bahia), 5% southeast.

Ranking

Brazil is the world’s third largest corn producer, with 7% market share and the second largest exporter,

with 18% market share.

CO

RN


14


Brazil exports 67% of coffee produced, 90% green coffee and 10% instant coffee.

Coffee cultivation has high workforce costs, which account for nearly 52% of total costs, since most part

of harvest is manual.


Green coffee: 19.3% USA, 18.8% Germany, 10% Japan.

Instant coffee: 16.3% USA, 13.5% Russia, 6.4% Ukraine.

Regionalization

Regional distribution of coffea arabica:

71.5% state of Minas Gerais

10.5% state of São Paulo

9.1% state of Espírito Santo

4.3% state of Paraná

2.8% state of Bahia

Regional distribution of Robusta coffee production:

75.6% state of Espírito Santo

12.5% state of Rondônia

6.7% state of Bahia

2.6% state of Minas Gerais

Seasonality

Coffee flowerage occurs between September and November in Brazil. Harvest starts in May and extends

until September.

Ranking

Brazil is the world’s largest coffee player with 37% market share in production and 27% in exports. Other

players, such as Vietnam and Colombia have low domestic consumption, opposite to Brazil, which

accounts for 15% of global consumption.

Distribuição regional da produção de café robusta:

71,2% Espírito Santo

14,3% Rondônia

6,4% Bahia

2,4% Minas Gerais

CO

FF

EE


15


Brazilian cattle is estimated in approximately 200 million heads. The commercial livestock for

slaughtering is estimated at 40 million heads, i.e., this is the volume of cattle at age and weight ideal for

slaughter. The remaining cattle is divided among dairy cows, male calf and unfinished cattle.

Exports accounts for 20% of beef national production.


Russia is the main market of destination of Brazilian beef exports, accounting for 22%. Hong Kong

accounts for 18%.

Regionalization

Cattle slaughter has the following regional distribution: 36.4% mid-west, 20.4% southeast, 20.1% north,

12.3% south and 10.8% northeast.

Ranking

Brazil is the world’s second largest beef producer with 16.9% market share, preceded by the USA, which

holds 19.1%.

Brazil is the world’s largest exporter with 21% market share.

Seasonality

Cattle raising cycle is long – 2.5 years since when male calf is born until slaughter with approximately 15

arrobas.

Cattle breeding system in Brazil is the extensive cattle raising, i.e., bull is raised released in the pasture

and eats grass.

The confinement system, where bull is raised with animal’s food in small areas, accounts for only 5% of

total slaughter.

Cattle crop occurs in the first half of the year, during rainfall period, when pasture is plentiful. With a

greater cattle supply for slaughter, finished cattle prices during such period are lower.

The cattle intercrop occurs in the second half of the year, during drought period, when cold and white

frost dry pasture. Bull lose weight, with lower cattle supply for slaughter. However, cattle prices increase

during such period, as supply is higher for confined cattle, whose production cost is higher. During

intercrop peak (October) there is greater number of confined male cattle slaughter.

Confinements have two shifts:

1st shift: unfinished cattle is stored between May-June and delivered in August-September.

2nd shift: unfinished cattle is stored between August-September and delivered in November-December.

BE

EF


16


Sugarcane Complex

Of sugarcane produced in Brazil, 46% is destined to produce sugar and 54% to produce ethanol.

Sugar has the following destination: 70% exports and 30% domestic market. Ethanol has the following

destination: 10% exports and 90% domestic market.

Out of total ethanol produced, 55% is hydrated (used as fuel in flex fuel vehicles) and 45% is used as

anhydrous (mixed to gasoline between 20% and 26%).

Sugar is an exports culture, since level of production exceeds consumption by approximately 70%. This

means any growth of national production generates exportable surplus.


Raw sugar (73% of production) : 15% China, 8% Bangladesh;

Refined sugar (27% of production): Arabian and African countries;

Ethanol: 60% USA, South Korea 13%.

Seasonality

Cane is a continual culture, since period between cane planting and harvest is 18 months, and from

same plant, it is possible to make until six cuts, on average.

Cane harvest period occurs between April and November. During such period, mills operate 24 hours.

Between January and March, plants are disassembled for maintenance.

Brazil is the single large global player with crop in the first half of the year. Other countries are: USA,

Europe, India, Thailand and Australia start their crop from the second half of the year.

Regionalization

65% southeast, 16.8% mid-west, 10.3% northeast, 7.3% south.

Ranking

Brazil is the world’s largest sugar producer, with 22.2% market share. Other players are: India 15%,

European Union 9.2%, China 8.5%, Thailand 6.2%.

Brazil is the largest exporter, with 46% market share in the global market. Other exporters are: Thailand

15%, Australia 5.4%.

World’s largest ethanol producers are: 57% USA and 27% Brazil.

SU

GA

R

AN

D

ET

HA

NO

L

Snapshot of the Market

17

Complexo Sucroalcooleiro

Da cana-de-açúcar produzida no Brasil, 46% se destina à produção de cana e 54% à produção de

etanol (safra 2011/12).

O açúcar tem a seguinte destinação: 68% exportação e 32% mercado doméstico. O etanol tem a

seguinte destinação: 7% exportação e 63% mercado interno.

Do total de etanol produzido, 68% é hidratado (usado como combustível nos carros flex fuel) e 32% é

usado como anidro (misturado à gasolina na proporção de 20% a 26%).

O açúcar é uma cultura de exportação, visto que o nível de produção excede o consumo em torno de

70%. Isso significa dizer que qualquer crescimento da produção nacional gera excedente exportável.

Países de destino

Açúcar Bruto (73% da produção) : 16% Rússia, 10% China;

Açúcar Refinado (27% da produção): Países árabes e africanos;

Etanol: 34% EUA, Coreia do Sul 15%, Japão 14%.

Sazonalidade

A cana é uma cultura perene, pois o tempo entre o plantio e a colheita da cana é de 18 meses, e da

mesma planta é possível fazer até 6 cortes, em média.

O período de colheita da cana ocorre entre abril e novembro. Nesse período as usinas operam 24

horas. Entre os meses de janeiro e março as plantas são desmontadas para manutenção.

O Brasil é o único grande player mundial com safra no 1º semestre do ano. Os demais: EUA, Europa,

Índia, Tailândia e Austrália têm início de safra a partir do 2º semestre do ano.

Regionalização

65% Sudeste, 16,8% Centro-Oeste, 10,3% Nordeste, 7,3% Sul.

Ranking

O Brasil é o maior produtor mundial de açúcar com participação de 21,2%. Os demais players são: Índia

16,8%, União Europeia 9,9%, China 7%, Tailândia 6%.

O Brasil é o maior exportador, com participação de 42% no mercado global. Os demais exportadores

são: Tailândia 15,3%, Austrália 5,2%.

Os maiores produtores mundiais de etanol são: 45% EUA e 33,5% Brasil.


Source: IBGE, CEPEA


Seasonality of

slaugther of steers

and cows and live

cattle prices

1997 – 2010

in R$ per arroba

Octavio de Barros - Macroeconomic Research Director

Marcelo Cirne de Toledo

DEPEC - BRADESCO does not accept responsibility for any actions/decisions that may be taken based on the information provided in its publications and projections. All the data and opinions contained in these information bulletins is carefully checked and drawn up by fully qualified professionals, but it should not be used, under any hypothesis, as the basis, support, guidance or norm for any document, valuations, judgments or decision taking, whether of a formal or informal nature. Therefore, we emphasize that all the consequences and responsibility for using any data or analysis contained in this publication is assumed exclusively by the user, exempting BRADESCO from all responsibility for any actions resulting from the usage of this material. We all point out that access to this information implies acceptance in full of this term of responsibility and usage. The reproduction of the content in this report (partially or in full) is strictly forbidden except if authorized by BRADESCO or if the sources (the name of the authors, publication and BRADESCO) are strictly mentioned.

Team

Global economics Fabiana D’Atri / Felipe Wajskop França / Thomas Henrique Schreurs Pires

Brazil: Robson Rodrigues Pereira / Andréa Bastos Damico / Igor Velecico / Ellen Regina Steter / Leandro de

Oliveira Almeida / Andrea Marcos Angelo

Brazilian sectors: Regina Helena Couto Silva / Priscila Pacheco Trigo

Proprietary survey: Fernando Freitas / Leandro Câmara Negrão

Internships: Ariana Stephanie Zerbinatti / Thomaz Lopes Macetti / Victor Hugo Carvalho Alexandrino da Silva /

Davi Sacomani Beganskas / Ives Leonardo Dias Fernandes / Henrique Neves Plens / Mizael Silva

Alves

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