7 July 2016 – Dr. Ariovaldo Zani, CEO of Sindiracoes (Brazil’s Feed Industry Association), warns that Brazilian feed and meat producers will continue to be pressured in the foreseeable future due to the high costs of corn, soybean meal and other feedstuffs indexed by the dollar.
Meat giants BRF SA, JBS SA and Marfrig SA have already curbed output or closed plants due to the soaring feed prices. In early-June, Francisco Turra, president of Brazil’s Animal Protein Association (ABPA), even estimated that as much as 15% of pork and poultry processing capacity had been shut, which amounts to about 225,000 tons of monthly meat production.
Experts estimate that Brazil’s soybean area will grow by 3.5% to 34.3 million hectares this summer. Meanwhile, summer corn acreage will rise only 3% next season to 5.6 million hectares when planting starts in September. It is understood that the increases may not be enough to help replenish domestic supplies that have almost run out this year as exporters have shipped more abroad. Therefore feed grain prices – especially corn – will likely remain high, near record levels.
“The strong devaluation of the local currency, as well as the increase in exports of agricultural goods (almost 35 million tons of corn, 54 million tons of soybeans and nearly 15 million tons of soymeal during the past business year) has resulted in record high prices in the domestic market”, says Dr. Zani.
The CEO of Sindiracoes demonstrated that corn sold in the region of Sao Paulo in June this year was worth R$ 50/60kg bag, while in June 2015, it was worth less than R$ 27/60kg bag. Meanwhile, soybean meal was worth R$ 1,560/MT in June 2016 and R$ 979/MT a year ago – 87% and 59% higher.
“As a result, the average cost of feed for broilers and pigs in June this year was 40% and 60% higher than the cost recorded in June 2015”, Dr. Zani adds.
He goes on to say: “The rising cost of feed has eroded Brazilian livestock producer profitability and has weakened all the other chain stakeholders, as costs being passed on to consumers continue to be rejected by the increasingly impoverished Brazilian population”.
(dated 07/07/2016)
