Brazil faces another year of high food inflation
Meat industry group ABPA says there is no relief in sight until Brazil begins harvesting its mid-year maize crop, Reuters reported.
“We see the need for companies to continue to pass on costs,” Ricardo Santin, the head of ABPA, said in an interview.
Given the weaker national harvest outlook, companies such as BRF SA and JBS SA may have to import grain, as they did in 2021, he said.
Private analysts are cutting their crop forecasts due to hot, dry weather in Brazil’s southern states, while national crop agency Conab has been cautious, cutting its outlook but predicting a bigger soybean and maize harvest. than last year.
Meat prices in Brazil rose 8.45% in 2021, according to government statistics agency IBGE, contributing to overall food inflation of 7.94% and fueling a 10.06% rise in food prices. core consumer price index, the highest for a calendar year since 2015.
Marcos Zordan, an executive at meat processor Aurora, said a more than 10% rise in Brazilian corn prices at the start of the year surprised buyers. If this continues, companies such as Aurora may resort to importing maize from Argentina or Paraguay, where the La Nina weather pattern has also hurt crop forecasts.
“I don’t believe there will be a shortage, but it will be an expensive product, no doubt,” Zordan said.
Over the past two weeks, the price of domestic maize has jumped to 94 reais per 60 kg bag, from 84 reais previously, following the announcement of drought hitting southern Brazil, Zordan noted.
Cesar Alves, an analyst at Itaú BBA Agribusiness, said meat packers initially needed to save on input costs as plantings of Brazil’s summer crops were within the ideal climate window in key states.
Now, the first maize crop will be lower than expected, by around four million tonnes, according to government estimates.
“Corn is up again,” Alves said. “At least in the first quarter of the year, it will be much tighter for the meat industry.”