Agribusiness begins 2025/26 cycle with cost and exchange rate pressure

Itaú BBA released this Friday (4) the 6th edition of Visão Agro, an annual report that outlines the panorama of Brazilian agribusiness for the 2025/26 cycle. For the third consecutive harvest, the bank begins the period with a message of caution, given an environment of greater complexity for the sector.

The study, produced by Itaú BBA's Agro Consulting, indicates that the new cycle begins under the effect of an adverse global scenario. High interest rates, economic slowdown and geopolitical tensions - especially the conflicts in the Black Sea and the Persian Gulf - are putting pressure on the costs of energy and fertilizers, inputs for which Brazil is highly dependent on imports. The situation is aggravated by the low prices of the main agricultural commodities, which requires producers to pay greater attention to cost and exchange rate management.

“Each crop has different nuances, but the general scenario has required attention to all crops and links in the chain. The default rate in the sector has been increasing and impacting some segments more significantly. This movement, combined with the risks of deterioration in the exchange rate with fertilizers and the challenges in foreign exchange management, has put pressure on the credit available to the sector,” says Cesar de Castro Alves, manager of Itaú BBA’s Agro Consulting.

The Agricultural Vision 2025/26 indicates that the cost formation of the next harvest will be more challenging. The increase in fertilizer prices is likely to intensify with the instability in the Middle East, deteriorating the terms of trade for several crops. Second-crop corn is one of the most impacted, with delayed acquisitions, but the pressure also reaches perennial crops such as coffee, orange and sugarcane, which traditionally make purchases throughout the second half of the year.

In the grain market, the recent appreciation of the real has encouraged imports at a time when sectors such as rice would need to export. Wheat producers are also facing difficulties in competing with Argentine cereals, which contributes to the prospect of a reduction in the planted area.

Among grain-consuming sectors, the outlook is more favorable. According to the report, the animal protein sector, especially cattle farming, should be experiencing a positive moment, driven by the drop in feed costs, an increase in feedlots and strong international demand. Lower production in the United States and high prices for American meat reinforce Brazil's competitiveness in the foreign market.

For Itaú BBA, another opportunity comes from the mandates provided for in the Fuel of the Future Law, which should increase the demand for biofuels, especially those produced from soybeans, corn and sugarcane, creating additional opportunities for rural production. As a result, the supply of soybean meal and DDG, which already benefits the animal protein sector, is also growing. This trend is likely to consolidate, reinforcing the competitiveness of production chains.

“Addressing structural challenges, such as infrastructure, access to financing and security in the business environment, is an essential condition for unlocking new opportunities and ensuring the sector’s competitiveness in the long term,” concludes Alves.