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February 7, 2017

Livestock Producers in Brazil Anticipating a Good 2017

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

After coping with a corn shortage that resulted in high corn prices over the last year and a half, livestock producers in southern Brazil are looking forward to a very good 2017. The corn supply in Brazil is on the rebound and corn prices have declined significantly from their record high prices of mid-2016. If the weather cooperates and the safrinha corn crop turns out to be as good as nearly everyone is expecting, domestic corn prices in Brazil could decline to the minimum price guaranteed by the government. While this is not good news for corn producers, it is very good news for Brazilian livestock producers.

Additionally, the Brazilian Association of Animal Protein (ABPA) feels the outbreak of avian flu in other parts of the world will open a window for Brazilian poultry exports because Brazil has never registered any cases of avian flu. Officials in the state of Santa Catarina, which is the second leading poultry producer after Parana, have put in place rigorous safeguards to keep avian flu out of the state.

Agricultural officials have put in place preventative measures and are very vigilant in monitoring the sanitary conditions of the poultry producers within the state and on the border with neighboring states. The Integrated Poultry Development Organization for Santa Catarina (Cidasc) conducts epidemiology monitoring of migratory birds in the state and for all domestic poultry production within a 10 kilometer radius of the two major stopovers for migratory birds within the state. All these efforts have been rewarded by the World Animal Health Organization certifying the safety and quality of poultry produced in the state.

In 2016 Santa Catarina exported more than a million tons of poultry to over 100 countries. The principal destinations for poultry from Santa Catarina were Japan, China, and the Low Countries. Together they accounted for 38.5% of the state's poultry exports. Poultry production generates more revenue than any other agricultural enterprise in the state.

While second to Parana in poultry production, the state of Santa Catarina ended 2016 as the leading producer and exporter of pork in Brazil. Pork exports from the state totaled 274,000 tons in 2016, up 43% compared to 2015, and the state accounts for 38% of Brazil's total pork exports. The principal destination of Santa Catrina's pork is Russia, China, and Hong Kong who together account for 67% of the total pork exports. In 2017, South Korea is expected to open its market to Brazilian pork.

As the new U.S. administration pulls out of or renegotiates existing trade deals, Brazilian livestock producers feel this will open the door for increased sales and market share for Brazilian meat products.