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Brazil: Feed Sector Forecasts Difficult, but Some Companies Remain Optimistic about 2022 Growth

Source: Lise Alves for Feedinfo

16 May 2022 - The Russia-Ukraine conflict has triggered a wave of uncertainties in the Brazilian animal nutrition sector. Very few companies are willing to forecast what may happen in the next months with production, supply, demand and sales of animal feed. The sector, however, has a few companies that are optimistic about the second semester of 2022 and beyond.

Indukern do Brasil, which has been in the country since 1996 and operates in the sectors of animal nutrition and health, petfoods and premix, is one of those companies. According to the company's general director, Guilherme Bonetti, the sector’s growth for 2022 is expected to be approximately 3.5%, but the current scenario may change at any time.

“We are still in a pandemic. The world’s largest port (in China) has been closed for four weeks and international logistics have been greatly affected. All of this leaves the market without a defined north,” Bonetti told Feedinfo.

Although normally, the second semester is usually quite strong for the animal protein sector sales, due to end-of-year festivities, H2 2022 is still uncertain.

“This year is quite uncertain due to commodity price accommodations. We are expecting a retracted second half of the year, with a re-balance of prices and inventory,” Bonetti said.

But, according to the director, there is always the possibility of new markets looking to Brazil as a supplier of animal protein. “Brazil is a big meat producer," he says, "and any change in the demand from a big consumer is bound to change market supply and demand. Let's wait for the end of the conflict in Ukraine, because both countries, especially Russia, can resume consuming on a large scale and render relief to the animal protein sector.”

If there is a growth in animal protein sales, Bonetti said, his bet is on the swine segment. “Trade associations are in talks with the government to help the segment, so if I have to make a guess, I believe that the swine sector should be the one with the greatest recovery in volumes.”

As for the dynamics of supply and demand for the second half of the year, Bonetti said this will all depend on what happens in Europe. “We know that both Ukraine and Russia are large consumers who have greatly reduced their purchases during the conflict period, so there is a retracted demand at a global level that could change direction as soon as these countries resume consuming large quantities,” he said.

Despite the uncertainties, the Indukern executive said he continues to be optimistic. “I personally am always very positive, and I believe that the market will continue to be strong, with growth, strong demand, and Brazil as a major producer of all meats in general is always taking advantage of this demand.”