Cepea, December 1, 2020
CATTLE – In mid-November 2019, prices for fed cattle arroba hit 200.00 BRL for the first time. Although this level was considered high in that period, it was still far from the real record, which, in turn, was set later in that same month and recently renewed.
In November 2020, agents from the sector were watching for the prices for fed cattle arroba, which were nearing 300 BRL – on Nov. 11, the CEPEA/B3 Index for fed cattle hit 292 BRL (53.93 USD). However, on the following days, the Index dropped.
As regards demand, many slaughterhouses in Brazil, primarily those that sell beef only in the domestic market, were postponing purchases in November because of the high price levels. Thus, these agents left the market in the second fortnight of the month, working with short slaughter scales and purchasing animals only when necessary.
Purchasers claimed that, in the wholesale market, beef prices were not rising as much as that for fed cattle, which was reducing their profit margins. The slaughterhouses that export beef, in turn, were relieved by international sales, since the exports pace was fast last month, primarily to China. Despite the recent dollar depreciation, the current level of the American currency is still high, favoring the revenue received in Reais.
Although data indicate a higher number of animals in feedlot this year, the first cycle was limited by uncertainties related to the covid-19 pandemic. Besides, many feedlot farmers are extending the fattening period, aiming to deliver heavier animals.
Some Brazilian cattle farmers are keeping animals on farms, expecting higher valuations, primarily due to the current high production costs (strong dollar, which makes imported inputs more expensive, and the record prices for calf, lean cattle, corn and soybean meal). In this scenario, liquidity was low in Brazil in November.
On Nov. 30, the CEPEA/B3 Index for fed cattle closed at 283.75 BRL (53.01 USD), 1.9% up compared to that on October 30.
HOG – The upward trend of live hog prices in the independent market, which had been observed since June, was interrupted in late November. Pressure came from supply, which became higher than demand. Until then, the availability of animals within the ideal weight for slaughter was lower than the demand from slaughterhouses, which was firm.
In general, while production is increasing, with some remains observed on some farms, demand weakened in the last week of November, which may be linked to the second fortnight of the month, when consumers’ purchase power decreases.
As regards pork meat, wholesalers and retailers reported difficulties in selling swine products in the Brazilian market, claiming that prices have been too high, and domestic demand, low, due to the lower purchase power of the population during the covid-19 pandemic.
With the nearness of the holiday season, lower demand has been concerning agents in the swine sector, since demand usually grows in November and in December, due to inventory building for Christmas sales.
POULTRY – Prices for chicken meat and its major competitors, beef and pork meat, increased on the average of November. However, for chicken meat, valuations were not as high, which ensured its competitiveness against the other two. This trend, which has been observed since mid-May, widened the price gaps between whole chicken and beef and pork carcasses to widest in the series of Cepea, which began in 2004.
In November, the average price for whole chilled chicken sold in the Greater SP set a record, in nominal terms, in the series of Cepea for this region. Valuations are primarily linked to the high liquidity for chicken meat in the Brazilian market and the exports increase in November.
In the Brazilian market of pork meat, quotes rose sharply early in the month, following the trend observed for live hog prices. However, as the second fortnight began and demand weakened, quotes dropped, due to lower sales in the domestic market. Still, the average monthly price is higher than that in October.
As for beef, prices continue firm, following the trend observed for fed cattle. The low supply of animals for slaughter and the firm demand from the international market kept beef prices on the rise in November.