Brazilian agribusiness producers and companies were moderately optimistic in the third quarter of 2018. The industry confidence index (CI Agro), a result of a partnership between Fiesp and OCB, ended the period marking 100.3 points – a 1.9 point over the second quarter. The result reflects a gradual recovery of the problems of the first half of the year, such as those caused by the truck drivers’ strike, although a good deal of uncertainty has remained on the sector. According to the study methodology, results above 100 points show optimism. Results below indicate pessimism.
There was also progress in the Industry Confidence Index (Before and After the Port), which rose 0.8 points to 99.3 points. However, there is a distinct behavior between the companies classified as Before the Porter, whose distrust increased – and the industries located after the Porteira, that recovered some of the enthusiasm.
In the industry before the gate (agricultural inputs), the fall in the 3rd quarter was 3.8 points, to 95.4 points. The uncertainties with regard to the Brazilian economy weighed to the cooling of the moods. But not all the aspects that make up the index are negative. “In fact, the perception of business conditions improved in the quarter – which was to be expected in the face of record fertilizer deliveries in July, August and September, which showed a recovery from the problems caused by the truck drivers’ strike and the lack of definition of freight, which has stalled the market, “says Roberto Betancourt, director of the Department of Agribusiness (Deagro) Fiesp.
Year-to-date (January / September), fertilizer deliveries totaled 25.9 million tonnes, up 4.4% from the same period last year. The agricultural machinery sector also shows signs of recovery. Cumulative sales from June to September are 18% higher than in the same period last year (although, in the year to date, from January to September, the market is still below 2017).
The After-Door (Food) industries regained some confidence in the current survey. The Index of this segment reached 101.0 points, up 2.7 points, enough to move from a moderately pessimistic range to a situation of slight optimism.
In general, the recovery is due to the improvement of perception in relation to the current conditions of the sector. “It is good to remember, for example, that in the third quarter there was a resumption of grain negotiations, practically interrupted during the truck drivers’ strike and in the subsequent period,” said Márcio Lopes de Freitas, president of the Brazilian Cooperatives Organization.
Favored by the US-China trade war, Brazilian soybean exports are still at a strong pace and the market is already working with the possibility of reaching 80 million tonnes – an absolute record, 12 million tonnes above that of 2017. ” result is only not better because Brazilian corn has lost competitiveness – and in a year of downsizing, grain shipments are expected to be around 5 to 6 million tonnes below the volume of last year, “adds Freitas.
For the meat sector, shipments of bovine protein have also increased in recent months, accumulating record volumes and softening the pessimistic tone of the industry, especially poultry and pigs – that still try to deal with the problems caused by the closure of several product markets Brazilians. Another segment whose situation improved was the sugar-energy. From June to September, prices of hydrous ethanol in the domestic market rose 5%, following the increase in oil in the foreign market and the devaluation of the real, alleviating the situation of the mills, which were under pressure from the drop in the sugar market, search.
As for the index of confidence of the agricultural producer (agricultural and livestock), there was recovery of confidence lost in the previous survey. Its Index rose to 101.7 points in the current survey, advancing 3.3 points. The increase occurred both among farmers and ranchers, who were more optimistic about business conditions than general conditions of the economy for both. Research shows that the reasons for this are based on three pillars: prices, credit and productivity.
The Farmers’ Confidence Index reached 106.0 points, up 3.1 points from the previous quarter and 13.1 points more than the same period in 2017. One of the main factors driving productivity growth is productivity : farmers are confident of a good new crop performance. “The climate cooperated in regions where planting began in September. This is the case of first-crop maize in southern Brazil and São Paulo and soybeans in Paraná and much of the Midwest (mainly Mato Grosso and Mato Grosso do Sul), “says Freitas.
Director of Deagro, Betancourt also emphasizes that another aspect in which optimism has increased is related to credit. “In this agricultural year, interest rates fell not only on official credit and on the resources made available by the Safra Plan, but in general financing to the market, opening up more credit alternatives for producers,” he said.
Among the ranchers there was improvement in confidence in the quarter, with its index reaching 88.9 points (high of 3.6 points). The advance was driven by beef cattle ranchers – with the highest price-related gain, reflecting the market recovery in the period from June to September. This was not enough to make the cattlemen’s mood out of the range considered pessimistic by the methodology of the study. Livestock producers make up the least reliable segment among all analyzed.
This text was translated by machine from Brazilian Portuguese.