March 9, 2018


Brazil beef, pork production forecast for 2018 revised upward



Several factors including an expanding consumption of animal proteins that goes with a growing economy have led to an upward revision of the US Department of Agriculture's forecast of increase for both beef and pork production in Brazil this year.


USDA's Foreign Agricultural Service forecasts beef production to increase 3.7% to 9.9 million tonnes in 2018 and pork production to 3.8 million tonnes.


Solid exports, mostly to China, and domestic demand are pushing beef production upwards, the USDA-FAS report said.


Pork production, it added, is also expected to go up in 2018 despite export constraints, mostly in Russia, and higher feed costs.


"The expected growth of the Brazilian economy in 2018 with declining inflation and unemployment rates and higher consumer confidence are main drivers expanding consumption of animal proteins", the report said.


On the export side, the report said that beef exports are likely to set another record in 2018. The USDA revised upwards its forecast for beef exports this year to increase at a rate of nearly 10%  and set a record of 2 million tonnes (carcase weight equivalent). The main driver for record exports in 2018 is the strong demand from China and other markets in Asia, it said.


However, pork exports face some hurdles including health constraints in some major markets; higher feed costs, which will likely reduce profit margins for hog producers, due to a lower corn crop.


However, USDA reduced its estimates for Brazilian pork exports in 2018 chiefly because of the current uncertainty about pork exports to Russia, which has expressed its concerns about the detection of ractopamine, which is prohibited in Russia, but legally used in Brazil.


The report said the volatility of the exchange rate also remains a factor of concern for both beef and pork industries in 2018 due to the upcoming presidential election.