Cepea, October 17 2019 – CATTLE – Beef prices (beef carcass, cash price, wholesale market of the Greater São Paulo) have been higher than fed cattle quotes (ESALQ/B3 Index, SP, cash price) since late 2016.
In September/19, the gap between beef and fed cattle quotes narrowed sharply, to 2.64 Reais per arroba, the narrowest in 12 months. This month (until October 15), however, the price gap resumed widening, to 3.8 Reais per arroba.
This scenario reflects the sharper price rises for the beef traded in the wholesale market in the first fortnight of October. From September to October 15, the average price for beef carcass increased 2.33%, to 164.70 BRL, while the average for fed cattle quotes rose 1.63%, to 160.90 BRL – both in real terms, deflated by the IGP-DI.
In September, some slaughter facilities reported to have beef inventories, since consumption was low in Brazil, which constrained price rises. In early October, however, the fast exports pace for beef – which may hit new records – added to the purchases from retailers to make inventories for the end of the year helped to push up prices.
On October 15, the ESALQ/B3 Index for fed cattle (cash price, São Paulo State) closed at 161.65 BRL (38.88 USD), 15, a slight 0.3% down in the month. However, the average price in the first half of the month, at 160.90 BRL, is the highest in all Cepea series, in nominal terms. In real terms, it is the highest level since February 2018, when the real average for the fed cattle Index was 161.01 BRL.
For the beef carcass traded in the wholesale market, prices increased 3.5% in the fortnight, to 11.24 BRL per kilo (cash price) on Oct. 15. The average price between Oct. 1 and 15, at 10.98 BRL per kilo, is the highest, in nominal terms, in all Cepea series. In real terms, however, it is the highest since December last year, at 11.02 BRL per kilo.
In general, the low supply of animals ready for slaughter continued to underpin fed cattle prices and, consequently, beef quotes in the Brazilian market. Besides, the international demand for the national beef has been firm, mainly from China.
EXPORTS – Despite the slight decreased between August and September, last month, Brazilian beef exports remained above the 100 thousand tons for the 15th consecutive month, unprecedented performance for the national cattle sector, according to data from Secex. The last time the amount shipped remained higher than that for so many months in a row was between May 2006 and June 2007, totaling 14 consecutive months.
In September, Brazil exported 123.72 thousand tons of in natura beef, 2.2% down compared to that in the previous month and 17.88% lower than that from Sept/18, when Brazil shipped a record amount, of 150.66 thousand tons (Secex).
HOG – The trading pace for live pig continues fast in the Brazilian market, largely due to the high exports of pork meat. Thus, live pig prices have been on the rise for six weeks in some of the regions surveyed by Cepea.
In the SP-5 region (Bragança Paulista, Campinas, Piracicaba, São Paulo and Sorocaba), live pig prices averaged 5.04 BRL per kilo in the first fortnight of October, 9.3% up compared to that in September and 28.5% higher than that in October 2018, in real terms (values were deflated by the IGP-DI from September/19).
In western Santa Catarina, the average price in the first half of the month was 4.70 BRL per kilo, 9.3% up compared to that from September and 30.4% higher than that in October/18, in real terms.
In the pork meat market, quotes increased too. In the wholesale market of the Greater São Paulo, prices for the special pork carcass averaged 7.42 BRL per kilo between October 1 and 15, 7.4% higher than that in September and 23.3% up compared to that in October/18, in real terms (in this case, values were deflated by the IPCA from September/19).
EXPORTS – After decreasing a steep 24% in August, the Brazilian shipments of in natura pork meat increased 13% in September. According to data from Secex, Brazil exported 49.8 thousand tons of the product last month, and of this total, 46% were sent to China. The frequent outbreaks of African swine fever (ASF) in Asia continue to lower pork meat supply in China, consequently increasing the international demand for the protein.
The sharp increase in the Brazilian exports of pork meat in September was mainly linked to the purchases from China and Hong Kong, which, altogether, bought 61% of all the pork volume exported by Brazil in the period. Last month, China imported 23.1 thousand tons of the Brazilian protein, and Hong Kong, 7.6 thousand tons. Between January and September 2019, Brazil exported 156.2 thousand tons of pork to China, 34% more than that from the same period last year.
POULTRY – Broiler meat sales have been lower than expected in the wholesale market of the Greater São Paulo. However, the demand for chicken cuts for barbecue, such as full chicken wing, drummette, mid-joint wing and heart, is higher. Thus, the prices for these products are on the rise, and the average this month is already higher than that registered in September.
Among frozen chicken cuts, the sharpest price rises in the wholesale market of the Greater São Paulo this month (until October 16) have been observed for chicken full wing – quotes rose from 6.98 BRL per kilo in September to 7.48 BRL per kilo in October, 7.2% up.
According to Cepea collaborators, besides increasing in the Brazilian market, the demand from Asian countries for these products has been firm too, contributing to lower supply in Brazil and, consequently, pushing up quotes.
Prices for chilled and frozen chicken also rose, but not as sharply. This month (until October 16), quotes for these products have averaged 4.33 BRL and 4.31 BRL per kilo, respectively, 0.9% and 0.1% up compared to that in September.
EXPORTS – The Brazilian exports of in natura broiler meat remained stable in September. According to data from Secex, Brazil shipped 298.6 thousand tons of the product last month, 1% down compared to that in August, which, in turn, reflects the lower number of working days in the period – the daily average of shipments increased 4%, from 13.7 thousand tons in August to 14.2 thousand tons in September. Considering only the months of September, however, the volume exported last month was the smallest since 2013 (Secex).
In October, data from Secex indicate that the daily exports average for in natura broiler meat in the first two weeks of the month (9 working days), at 16.7 thousand tons, was 17% higher than that in September and 9% up compared to that in October/18.