Cepea, September 16, 2020 – CATTLE – The year of 2020 is being marked by several new records. The fast exports pace for the Brazilian beef and the low supply of fed cattle, which has been confirmed by official data indicating a lower number of animals slaughtered, are keeping the prices for fed cattle arroba on the rise in the Brazilian market.
However, this does not mean that Brazilian cattle farmers have had higher margins, since the prices for calf and lean cattle have also been at record levels, in real terms, in the series of Cepea. Besides the high prices for calf and lean cattle, which account for more than 50% of production costs, the sharp dollar appreciation this year has increased the prices of the inputs that are imported and largely used in cattle farming. It is worth to mention that quotes for corn and soybean meal have also been high in the Brazilian market.
While the fast exports pace and the strong dollar favor the revenue of beef exporters, the slaughterhouses that sell meat only in the domestic market need to deal with record cattle prices and a weak demand for beef in the Brazilian market. Beef carcass prices have been higher in 2020 than in previous years, while the purchase power of consumers has decreased this year, due to the economic crisis caused by the covid-19 pandemic. Thus, many consumers are opting for cheaper sources of animal protein, such as pork and chicken meat or eggs.
Brazilian beef exports are influencing the performance of the whole livestock chain in Brazil. Cepea calculations in partnership with CNA show that, from January to May 2020, the GDP of the Brazilian livestock grew by a staggering 9%, while that for the national agriculture increased by 2.51%. Thus, the Brazilian agribusiness GDP rose by 4.62% in the first five months of 2020.
BRAZILIAN MARKET IN SEPTEMBER – Fed cattle prices continued firm in the Brazilian market in the first fortnight of September, hitting new daily records, in nominal terms, and nearing the real record – on September 15, the CEPEA/B3 Index for fed cattle closed at 247.50 BRL (46.82 USD), 4.17% up in the month. This scenario is linked to the low supply of animals in Brazil and the fast exports pace for the Brazilian beef, primarily to China.
EXPORTS – In August, Brazil exported 163.22 thousand tons of in natura beef, 3.56% less than that shipped in July, but 29.02% more than that from August 2019, according to data from Secex (Foreign Trade Secretariat). This volume is also a record for a month of August.
From January to August, exports totaled 1.109 million tons, 18.8% higher than that between January and August 2019 and a record for the period. Revenue in Real has totaled 24.4 billion BRL this year, 74.94% up compared to that received between January and August 2019 and also a record (Secex).
HOG – Live hog prices increased in all the Brazilian regions surveyed by Cepea in the first fortnight of September, hitting new nominal records. Higher demand for pork meat, due to the payment of workers’ wages early in the month added to the lower supply of animals ready for slaughter pushed up quotes for both live animals and pork meat. Agents from the sector reported that the weight of the animals available is still low.
As for the pork meat traded in the Brazilian market, Cepea collaborators reported that it was difficult to pass on to pork cuts the consecutive price rises for live hog and pork carcass. It is worth to mention that the purchase power of Brazilian consumers has decreased because of the economic crisis caused by the covid-19 pandemic, limiting the demand for meat.
EXPORTS – Although the Brazilian exports of pork meat decreased slightly from July to August, the exports pace continued fast last month. Sales to the international market have been one of the main reasons for the price rises in the domestic market, for both live hog and pork meat, since slaughterhouses have been purchasing animals for slaughter and increasing the prices asked for pork carcass and cuts in order to ensure positive margins.
According to a report from Secex, Brazil exported 87.7 thousand tons of in natura pork meat in August, a slight 2.8% down compared to that from July, but a staggering 87.5% up compared to the volume shipped in August 2019. According to Cepea collaborators, the firm Chinese demand for meat, mainly beef and pork, is one of the main reasons for the fast exports pace.
Revenue from shipments was favored by the dollar appreciation (in August) and the high prices paid by the international market for the Brazilian pork meat. In August, the exporting sector received 1.07 billion BRL, 5.9% higher than that in July and more than two-fold that received in August/19.
EXPORTS IN 2020 – The fast exports pace since January, mainly in the past months, led the total volume exported in 2020 (January to August) to be 48.4% higher than that in the same period last year, totaling 599.2 thousand tons.
POULTRY – Prices in the Brazilian poultry sector continue on the rise in September – in August, quotes increased for the third consecutive month. This scenario is mainly linked to the high competitiveness of this protein against beef and pork meat in the domestic market as well as the fast exports pace – the volumes shipped last month were the second highest in the year. High liquidity in both the Brazilian and the international markets boosted quotes in the entire poultry chain, from live chicken to cuts and giblets.
EXPORTS – According to data from Secex (Foreign Trade Secretariat), Brazil exported 340.7 thousand tons of in natura chicken meat in August, the second highest volume in the year, only after that shipped in May. This volume is also 0.9% higher than that from July and 1.8% above that from August/19. Revenue totaled 2.48 billion BRL in August, 5.3% higher than that from July and 11.2% above that in August last year.
PRODUCTION – According to data from IBGE, in the second quarter of 2020, the Brazilian poultry sector registered the lowest production since the same period in 2018, totaling 1.41 billion animals slaughtered, also 6.8% less than that in the first quarter of the year.
Data confirm efforts to reduce production in order to obtain firm prices. It is worth mentioning that, from April to May, liquidity was very low because of the effects of the covid-19 pandemic.