The Latest News from Brazil

Roundup of key Ag issues in South America

Time to clear the desktop. There's always a lot of Brazilian Ag news, and often not enough space to include it all. So here's a roundup of some of the key issues taking place here, right now.

Higher wholesale meat prices

Meat prices in Brazil are on their way up. Brazil's IPA wholesale price index shows a drop of just over one percent, surprisingly, in the animal rations price inflation. Feed is still going up, but only at about 3.8% in October, versus 4.8% in September, says the Getúlio Vargas Foundation. Brazil is one of the world's top poultry producers and exporters. Pork prices were up less than two percent, against inflation of greater than seven percent in September.  Beef prices were up less than half a percent on the month, as there just isn't much confinement here.  Should we look for the "food or fuel" debate to reach Brazil?

Alternative fuels

Brazil's 2012-13 sugarcane crop is slated to produce some 5.6 billion gallons of ethanol, which is about 2½ percent better than the 2011-12 crop year.  It's an improvement, but not enough. Brazil's growing fleet of flex-fuel cars has meant greater demand for ethanol—but only for ethanol that costs no more than 70% of the gasoline price. That's because ethanol has lower BTUs than gas, and it doesn't make sense to buy ethanol, mile per mile, at a cost of greater than 70% that of gasoline. Brazilian motorists know this.

Where's the rain?

Brazilian soybean planting is behind last year's pace, as we switch from La Nina to El Nino. In Mato Grosso, producers are 45% finished planting soybeans this year, but were 62% done this week of last year.  State ag leaders say it's no big deal, that La Nina brought extraordinarily early rainfall last year. But the delay of the arrival of real rainfall is bugging some farmers. I talked with one producer in Minas Gerais who hasn't been able to get anything in the ground so far, and is worried about yields as a result.

Biodiesel blend

Brazil's fuel regulatory agency is holding public hearings about the possibility of increasing the nationwide mandatory biodiesel blend from the current five percent to seven percent. The country imports about all its diesel needs, with little refining capacity, and Petrobras, the state oil company, figures it could save a fortune on imported diesel if the blend were only increased. Meanwhile, biodiesel producers are running at only about 50% of capacity. Most Brazilian biodiesel is derived from soy, with beef tallow filling most of the remaining demand.  The Brazilian government would be interested in decreasing diesel imports, but it wants more biodiesel to come from feedstocks that are not machine-harvested, in order to provide work for untrained farm laborers.

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