Exchange can bring instability to feed

São Paulo-In a tone of optimism, but with caution, the National Union of the Animal feed industry (Sindirações) believes that the production could grow 3.3% next year in about 2016. The focus of uncertainty is due to the effects of the exchange rate.
Entirely dependent on the internal market, the livestock feed industry is very tied to performance of cattle, poultry and pigs and is still sensitive to the impacts of the economic crisis, since 80% of the meat is in domestic consumption-factors that collaborate to reduce the accuracy on the expectations of the next cycle.
"From the point of view of production, the supply of inputs [corn and soybean meal] will recover, provided there are no climate problem. But the exchange rate is something with which we are aware. If you have a quick devaluation of our currency, the price may go up, "says the Vice President of Sindirações, Ariovaldo Zani. In 2016, the scarcity of corn (raw material of the feed) for domestic consumption has risen the costs of animal protein producers and, as a result, stopped the advance of the manufacturers of food for the animals.
In this context, the annual production is estimated at 66 million tons, neutral, when compared to the performance of 2015. The dairy segments and respective drops of cutting had 3.1% and 6.5%, consolidated to September against the nine months of the previous year. On the other side, birds are up 1.5% and 3.4%, pigs to offset the total.
Only the birds account for 57% of national consumption and feed pigs, by 23%. Survey of the Brazilian Association of Animal protein (ABPA), released this week, predicts a rise of 3% to 5% in both the production and exports of chicken in 2017. For the pork, the entity speaks in increment of up to 2% in the offer and to 5% on foreign sales. "We are direct reflection of these chains, I can''t expect low if they consider gain next year," ponders the Union Executive.
If expectations are confirmed, the feed production can reach the record of 69 million tonnes. Zani makes it clear that the amount is still dependent on the recovery in the domestic economy, international trade and consumer confidence.
Outside, the beginning of the Presidency of Donald Trump in the United States must be marked by promises of increased investments that can lead to inflation and high growth in interest, attracting resources to the North American market and devaluing currencies around the world. Here, the concern is in political tension. In the event of a new crop failure caused by climate problems-even remote-and possible import of raw material to supply animal feed manufacturers, the high dollar will weigh on the producer''s pocket.
Including the ABPA has Paraguay corn supply, Argentina and USA, whose sale to Brazil was passed recently, to compose the inputs in 2017.
A way to avoid another crisis in the supply of grain to the farms is the early acquisition of inputs, as with the hedge by trading companies for export. The DCI, the President of the Association of Soy and corn producers in the State of Mato Grosso (Aprosoja-MT), Manvendra Dalcin, said companies like JBS and BRF are already looking for farmers to close commodity purchase agreements that will be harvested in the next year. Until now, this practice was not common in the sector of animal protein from Brazil.
"These operations help ensure the scenario we anticipate stability or high, for the production of feed," adds Zani.
Sector performance
To detail the birds, the Sindirações hopes to close 2016 with 32 million tonnes in food for accommodation of chicks and 5,700,000 for laying hens. In 2017, these figures rise to 33 million and 5,900,000 tonnes, respectively.
The pigs have advanced in the gap left by the beef, which had more expensive prices in the domestic market. The ration of this segment grew 3.5% to 16,400,000 tonnes next year, the projection is to reach 17 million tons.