Cepea, September 3, 2020 – CATTLE – The year of 2020 is being marked by several new records. The fast exports pace for the Brazilian meat and the low supply of fed cattle, which has been confirmed by official data indicating a lower number of animals slaughtered in Brazil, are keeping the prices for fed cattle arroba on the rise in the domestic 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 meat 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 Brazil. 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.
AUGUST – In August, the CEPEA/B3 Index for fed cattle averaged 228.28 BRL, a real record in the series of Cepea, which started in 1994 for this product (monthly averages were deflated by the IGP-DI from July/20). Considering the daily series, the highest price level, in real terms, was registered on November 29, 2019, of 251.52 BRL (deflated).
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 – 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 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.
POULTRY – Prices for the three most consumed meats in Brazil increased in August, following the trend observed in the past months. However, for beef and pork meat, quotes increased more sharply than that for chicken meat.
Thus, the price gap between chicken meat and its major competitors has never been so wide, considering all Cepea series, which started in 2004. As chicken meat has been very competitive in the market, liquidity was higher in August.
The faster trading pace for chicken meat in the Brazilian market, which has been favored by the high competitiveness of the product, continues to be the major reason for the valuations.