Cepea, October 16, 2020
CATTLE – The consecutive valuations of fed cattle arroba in the Brazilian market this year are pushing up prices for the beef traded in wholesale market of the Greater São Paulo. In the first fortnight of October, not even the current economic slump, unemployment and the reduction of the emergency aid in Brazil constrained price rises for beef in Brazil.
Besides the lower supply of fed cattle ready for slaughter, the fast exports pace also influenced beef valuations in Brazil, since it keeps domestic supply low. It is worth to highlight that, in October, some retailers begin to build inventories for the holiday season, which helps to push up prices at this time of the year. The high price levels for pork and chicken meat in the Brazilian market contributed for the valuations of beef too.
In the first fortnight of October, beef carcass prices averaged 17.03 BRL/kg, a new real record in the monthly series of Cepea, 4.2% higher than that in September. As regards fed cattle, the average of the CEPEA/B3 Index in the first half of the month was 258.77 BRL, also a record in the monthly series of Cepea, 6.18% higher than that in September.
As fed cattle prices increased more sharply than beef quotes, the price gap between these products widened. It is worth to mention that this scenario reduces profit margins of the slaughterhouses that sell beef only to the Brazilian market. In the first fortnight of October, the average price for fed cattle was 3.32 Reais/arroba higher than that for beef carcass, against 1,45 Real/arroba in September.
EXPORTS – After having hit almost 170 thousand tons in July, Brazilian beef exports decreased in August and in September. Last month, shipments totaled 142.4 thousand tons, 12.8% less than that exported in August, according to data from Secex (Foreign Trade Secretariat).
Still, the volume exported in September is 15% higher than that from the same period last year. Considering only the months of September, the volume shipped this year is lower (5.5%) than that in 2018, when exports totaled 150.6 thousand tons, a record for the month.
As the volume exported in September was lower, the revenue received last month dropped by 10.87% compared to that from August, totaling 583.14 million USD. However, compared to September 2019, the revenue received last month was 11% higher, according to Secex.
In Real, in turn, the slight dollar depreciation against Real, by 1.1% from August to September, helped to press down the revenue received in September. Thus, the total received last month, at 3.148 billion BRL, was 11.84% lower than that in August. However, compared to that from September last year, the revenue received in Real increased by a staggering 45%.
2020 – Despite the decreases in September, this year, the Brazilian exports of in natura beef have totaled 1.25 million tons, 24.58% more than that in the same period last year and a record for the first nine months of a year (Secex).
As regards revenue, the total is at 5.4 billion USD, 30% higher than that received between January and September last year. In Real, this revenue is higher than 27 billion, a staggering 71% up compared to that in the first nine months of 2019 and a record for the period.
Until the end of the year, the strong dollar and firm international demand, mainly from China, are expected to underpin the fast exports pace.
HOG – The low supply of hog within the ideal weight for slaughter and the increase in the demand from slaughterhouses continued to push up hog prices in the Brazilian market in the first fortnight of October - quotes hit new real and nominal records in many Brazilian regions in that period.
In the Brazilian market of pork meat, Cepea collaborators claimed difficulties to pass on the price rises for live hog to pork carcass and cuts, since consumers have not been willing to pay the current high prices asked for these products, which reduced liquidity.
EXPORTS – With the steep decrease from August to September, the volume of pork meat Brazil exported last month was the lowest since April. Still, shipments pace has been faster than in previous years. In the first nine months of 2020, Brazil exported more pork meat than it did in 2019 (Jan. – Dec.)
Considering all pork products sold to the international market, Brazil exported 85.4 thousand tons in September, 12.6% down compared to that in August, according to data from Secex. Despite the monthly decrease and the slightly slower pace compared to that between May and August, the volume exported was still 33.3% higher than that from Sept/19.
As for the destinations for the Brazilian product, all major commercial partners imported lower volumes in September. China and Hong Kong purchased 62.8% of all the volume exported in the month, 13.6% and 30.2% less, respectively, than the amounts imported in August, totaling 43.8 thousand tons (China) and 9.8 thousand tons (Hong Kong).
Brazilian meat exports have been high this year, primarily boosted by the demand from China, which is still suffering the effects of health issues on their national production (such as African swine fever). As regards pork meat, the volume exported to China this year is at 755.6 thousand tons, a record and 2.1% higher than all the amount shipped in 2019.
POULTRY – The prices of both soybean meal and corn increased sharply in the Brazilian market in the past weeks, while live chicken quotes did not rise as sharply. This context reduced the purchase power of poultry farmers in the first fortnight of October. Besides the recent valuations, Cepea collaborators reported difficulties to find large batches of corn and soybean meal in the spot market. In the market of chicken meat, sales have been high, pushing up prices for both the meat and live chicken.
EXPORTS – With the decrease in the Brazilian exports to the two major destinations for the national chicken meat, China and Saudi Arabia, the total volume shipped in September was lower.
According to data from Secex, Brazil exported 345 thousand tons of chicken meat in September, 4.8% less than the volume shipped in August and 2.3% down compared to that in Sept/19. As regards revenue, the strong dollar pushed up the amount received by the sector by 7% compared to that in Sept/19, totaling 2.59 million BRL last month, however, this total is still 4.8% lower than that received in August/20.
As for the destinations for the Brazilian chicken meat, in September, China purchased the lowest volume of the product in six months, totaling 52.6 thousand tons, 4.1% less than that in August (Secex). To Saudi Arabia, sales decreased by a steep 16.6%, to 39.1 thousand tons.