Boston, MA -- (SBWIRE) -- 08/12/2013 -- Overall, we believe there is the most potential for growth for the soybean, livestock and coffee segments over the medium term. This is because of a shift in food consumption growth towards Asia for these items, while demand from traditional buyers will see only subdued growth. We are positive about the sugar cane sector as a whole, as we forecast strong production growth over the rest of our forecast period. This will benefit the ethanol industry first, as economics are now favourable to biofuels production at the expense of sugar. In the short term, we flag risks that the current record grain harvest will encounter problems at the export stage because of current queues at the country's major ports as well as strikes. Among Brazilian agribusiness companies, we favour Sao Martinho because it is the largest player in the sector and the most likely to benefit from industry developments.

Key Forecasts

- Soybean production growth to 2016/17: 33.6% to 88.8mn tonnes. We expect global prices to stay the most supported among the grains, which will encourage farmers to favour soy at the expense of corn in the medium term. Also, global demand is likely to pick up, which will continue to provide farmers with incentives to invest in their soybean crop.
- Poultry consumption growth to 2017: 18.9% to 10.9mn tonnes. This will come from a growing middle class and the general preference for poultry over all other meat groups because of its health properties and lower prices.
- Cotton production growth to 2016/17: -23.4% to 7.1mn tonnes. Our outlook for prices to continue to recover will help production growth in the coming years. Nevertheless, prices will not return to their previous 2011 highs and will moderate by the end of our forecast period, which will lead production growth to stall by 2015/16.
- 2013 real GDP growth: 3.3% (forecast to average 3.7% over 2012-2017).
- 2013 consumer price inflation: 3.1% average.
- BMI universe agribusiness market value: 4.4% year-on-year increase to US$173.3bn in 2013, forecast to increase by an average of 3.2% annually between 2011/12 and 2016/17.

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Revisions to our forecasts:

- Sugar: historical production figures changed in line with the latest official numbers.
- Cocoa: 2013/14 production revised down from 266,600 tonnes to 200,000 tonnes; historical consumption revised up in line with estimates from the International Cocoa Organization and Food and Agriculture Organization.
- Corn: 2011/12 production estimate revised up from 71.0mn tonnes to 73.0mn tonnes in line with the latest official figures.
- Cotton: 2012/13 production revised down from 6.5mn bales to 5.5mn bales.
- Soybean: 2012/13 production revised up from 78.0mn tonnes to 81.0mn tonnes in line with official estimates.

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