August 27, 2012

Due to pressure upon margins from higher feed grain costs, the number of cattle in feedlots in Brazil has reportedly contracted in recent months despite an initial forecast of a 12% increase throughout the 2012 calendar year.

In Mato Grosso state, the number of cattle on feed decreased 20% between April-July, to 720,422 head.

The Brazilian feedlot sector is still in its early stages, with growth in recent years the result of the deteriorating pasture conditions and breeders intentions to improve daily weight gain during dry periods.

On year, Brazilian corn prices have reportedly risen 54%, while soy prices have jumped 89%. The forecast positive outlook for cropping in Brazil over the medium term is expected to see pressure between livestock and crop production in Brazil for the most productive soils increase - with some analysts expecting cattle production to be pushed into less productive regions, in preference of expanded cropping enterprises.