Producers and industries linked to Brazilian agriculture ended 2017 with a moderate level of optimism, as demonstrated at the beginning of the same year. This is what the Agribusiness Confidence Index (IC Agro) indicates, an indicator prepared by Fiesp and OCB, released on Thursday (01st). By the beginning of 2017, the indicator had scored 100.5 points. IC Agro closed the fourth quarter of 2017 at 100.3 points, advancing 1.2 points from the previous quarter. According to the methodology of the study, results above 100 points correspond to optimism. Scores below demonstrate a low degree of confidence.
“This result signals a recovery in the spirits that had cooled through the year, mainly between farmers and input manufacturers. According to Antonio Carlos Costa, manager of the Agribusiness Department of Fiesp (Deagro), among cattle ranchers and the general industry, the level of distrust remained higher.
The 4-point drop in industry confidence (before and after the gatekeeper) to 99.3 points over the previous quarter does not necessarily mean a general cooling of the moods as the result was influenced by specific industry segments after the gate , such as trading and logistics companies, where profit margins have been under heavy pressure in recent times. However, most of the sectors that make up this group – such as food and sugar-energy – presented greater confidence in relation to the previous quarter. The industry before the gate (agricultural inputs) increased 0.4 points to 105.2 points at the end of the fourth quarter, remaining practically stable.
“The results of the indicator largely reflect what happened over the year. In the second quarter, farmers were more hesitant to move ahead with fertilizer and pesticide talks as prices for major agricultural commodities such as soybeans and corn were down. From the third quarter onwards, however, the marketing of inputs has normalized, given the gradual recovery in prices and a favorable climate for the development of the summer harvest, “explains Costa.
There was also progress towards the index of confidence of the agricultural producer (agricultural and livestock), which closed the 4th quarter of 2017 at 101.8 points, up 8.6 points from the third quarter. However, this was the only period of the year in which the indicator for this segment was considered optimistic. According to the results, there is more enthusiasm among farmers than among ranchers. In the first case, the index rose 11.1 points, reaching 104 points.
“The recovery in commodity prices such as soybeans and corn in the last three months of 2017 helps to explain a little bit about the increase in optimism. Another highlight is the producers’ mood in relation to agricultural credit, which is one of the best levels in the historical series. One negative point that deserves attention, however, is the sentiment regarding production costs, a variable in which pessimism has increased in the last two surveys. Stocks of products (agricultural inputs) in the hands of manufacturers and resellers are falling gradually, opening space for the recomposition of margins, “says Márcio Lopes de Freitas, president of OCB.
Among the ranchers, confidence was practically stable. The indicator of this group rose 0.9 points, closing the year at 95.1 points. Lack of courage in relation to production costs weighed in to keep the indicator at a low level – which was to be expected in view of the increase in prices of important inputs, such as maize, during the second half of 2017. Other where prices lost confidence – in this case, the fall was more pronounced among dairy farmers than among the beef cattle ranchers.