Cepea, August 18, 2020 – CATTLE – Fed cattle prices continue on the rise in the Brazilian market. In the first fortnight of August, the average CEPEA/B3 Index for fed cattle (São Paulo State, cash price) closed at 226.84 BRL, the highest, in real terms, in all Cepea series, which started in 1994 (monthly averages were deflated by the IGP-DI from July/20). Between July 31 and August 14, the Index dropped by 1.5%, closing at 224.75 BRL (41.39 USD/kg) on August 14.
Besides the low supply of animals ready for slaughter, the firm demand from the international market, primarily from China, continues to underpin prices in Brazil. From January to July 2020, China received more than 40% of the total beef volume Brazil exported.
According to data from Secex (Foreign Trade Secretariat), this year, Brazil has shipped 451.77 thousand tons of beef to China, against 174.98 thousand tons in the same period last year, an increase of 158.2%. It is worth to mention that, between January and December 2019, China received 485.61 thousand tons of the Brazilian beef, almost the same as the amount shipped in the first seven months of 2020.
Although the monthly volumes exported to China have been increasing, the Asian country has lowered the price paid for the Brazilian beef. While in January 2020 the price paid for the product averaged 6.07 USD per kilo, in July, it dropped to 4.32 USD per kilo, almost 30% lower. From June/20 to July/20, quotes decreased by 9.7%, according to data from Secex. In 2020, the average is at 4.98 USD per kilo, 3.51% lower than that last year (5.16 USD per kilo)
On the other hand, as the dollar is strong, the decrease in the revenue received in Real by national slaughterhouses was limited. In January 2020, the average price paid for the Brazilian beef was 25.18 BRL per kilo, while in July, it averaged 22.78 BRL/kg, 9.52% lower. From June to July, quotes decreased by 8.3%. This year, the average is at 24.60 BRL per kilo, higher than that in the entire year of 2019, at 20.42 BRL per kilo.
Considering the monthly averages this year (until July), the United States have paid the highest price for the Brazilian beef, 7.12 USD per kilo, followed by Italy (7.02 USD per kilo), the Netherlands (6.96 USD per kilo) and China (4.98 USD per kilo). It is worth to mention that the gap between these prices is linked to the beef cuts that each country purchases.
HOG – Live hog prices rose in the Brazilian market in the first fortnight of August, boosted by higher sales of pork meat – which increase the demand from slaughterhouses for animals – and low supply. Thus, the CEPEA/ESALQ Index for hog has been hitting nominal records in all the Brazilian states surveyed by Cepea. In real terms, The Indexes in Santa Catarina, Paraná and Rio Grande do Sul have hit records in the Cepea series, which started in July 2010 (the monthly averages were deflated by the IGP-DI from July/20).
It is worth to mention that, until July 2019, the Indexes from these three states considered trades in both the independent and the integrated markets, which tends to press down quotes. From August 2019, these Indexes started to consider only the prices paid to independent hog growers.
Cepea collaborators have claimed difficulties to find hog within the ideal weight for slaughter, and many animals were lighter-weighted when they were sold. In the Brazilian market of pork meat, demand increased in the first fortnight, due to the payment of workers’ wages early in the month.
EXPORTS – After a record in May, the volume of in natura pork shipments in July was the second highest of Secex series, which started in 1997. Last month, Brazil exported 90.2 thousand tons of pork, only 500 tons less than in May. In July, the pork volume shipped was 3.7% above that verified in the month before and 46.7% higher compared to the volume in July/19, according to data from Secex.
POULTRY – In the first half of August, the purchase power of Brazilian poultry growers resumed decreasing against the major inputs consumed in the activity, corn and soybean meal. Although live chicken prices continue on the rise in the domestic market, quotes for corn and soybean meal have increased even more this month.
In the corn market, despite the advance of the second crop harvesting, sellers were away from the market in that period, while purchasers were interested in buying the cereal for the short-term, which pushed up prices.
For soybean meal, although soybean prices are high, the domestic demand continues to push up meal quotes, which have been hitting new records in the Cepea series, which started in January 1999.
CORONAVIRUS AND CHINA – News indicating that the Chinese government found traces of the new coronavirus on a chicken meat load imported from Brazil has concerned agents from the national poultry sector, since China is the number one destination for the Brazilian chicken meat.
China has not announced any restrictive measures – as a health barrier – yet, but it is worth to mention that the Asian country is still dealing with health issues, primarily linked to African swine fever outbreaks (ASF). This year, China has been importing high volumes of meat, mainly from Brazil. As for chicken meat, between January and July 2020, Brazil exported 406.8 thousand tons of the product to China, 31% more than that shipped in the same period last year.