In agriculture, 2024 will be a year to take care of planning – 01/16/2024 – Vaivém

The year 2024 will be a period for careful cash management and planning adjustments. The challenges, which began in the summer harvest, will persist in the off-season.

World economic growth is still modest, interest rates are high and the dollar is valued. All of this poses challenges for a recovery in commodity prices.

The assessment comes from analysts at consultancy Céleres, who believe in another year of lower prices, since the relationship between stocks and consumption is relatively high.

External and internal logistics costs are pressing at a time when commodity prices are powerless to react. The weather factor, which is very present in this harvest, can affect the formation of trading companies’ stocks.

It is a period of “almost perfect storm”, they say. Despite lower production costs, the challenges in building margins are great. They will certainly be lower and may be below the historical average of the last 20 years.

Despite these setbacks, Céleres sees possibilities in business. The income squeeze and the increase in defaults for some could be opportunities for land and farms to be put up for sale for others.

It is a period, however, of fewer acquisitions and more organization of the business model.

The paths for the second harvest may also be revised, with a diversification of production towards alternative crops, such as sesame, sunflower, sorghum and cover crops.

Opting for new crops will help diversify income.

Despite the drop in commodity prices, Brazil still has competitive advantages, which should lead the sector to once again achieve a positive balance.

The production of corn ethanol, a sector that has been growing at an intense pace, should still be important for investment. The drop in corn prices reduces the sector’s production costs, but, at the same time, cuts revenue from sales of fuel and derivatives.

Céleres analysts also highlight the maturity of private credit in agricultural financing. The change is due to the maturation of titles created in the early 2000s and new investment vehicles linked to the sector.

In 2024, the stock of financial securities and the equity of funds linked to agribusiness should reach R$1 trillion, they predict.

Stocks Based on data from Usda (United States Department of Agriculture), Itaú BBA technicians point to a growth in world stocks of corn and soybeans.

Soy Final stocks of the oilseed in the 2023/24 harvest will exceed those of the previous harvest by 12%. If confirmed, they should represent 30% of global consumption.

Corn Final cereal stocks for this harvest grow 8%, totaling 325 million tons, 27% of world consumption.

Wheat Data from Radar Itaú BBA, when evaluating Usda numbers, indicate a 4% drop in ending wheat stocks. Even with this reduction, they represent 33% of world consumption during the period.

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