Context highlights Brazilian potential to meet firm demand from China

Cepea, May 20, 2020 – CATTLE – China, which has recently reported new cases of African swine fever (ASF) in its hog herd, continues to demand high amounts of the Brazilian beef.

 

The Brazilian market seems to be able to meet the firm demand from China, favored by the high competitiveness of the national product in the international market, primarily due to lower production costs compared to other relevant world competitors. Currently, the strong dollar is also favoring the price of the Brazilian beef exported.

 

Added to that, China has recently suspended beef imports from some Australian slaughterhouses, which may increase the Chinese imports from Brazil in the coming months. It is worth to mention that Australia has been an important beef supplier to China.

Considering the total volume exported between January and April 2020, Brazilian beef shipments totaled 548 thousand tons, a record for the period and 1.15% higher than that exported in the same period last year, according to data from Secex.

 

Despite the slight increase between 2019 and 2020, figures highlight the sharp increase in Brazilian sales to China. Comparing the first four months of 2020 to the same period in 2019, shipments to China more than doubled (+111.83%), from 96.95 thousand tons in 2019 to 203.47 thousand tons in 2020.

 

BRAZILIAN MARKET – Fed cattle prices dropped in the Brazilian market in the first fortnight of May. In general, amid the current uncertainties related to the coronavirus pandemic, many operators have been cautious when trading, selling and purchasing animals only when necessary. Between April 30 and May 15, the CEPEA/B3 Index for fed cattle dropped by 2%, closing at 194.90 BRL on May 15.

 

HOG – The trading pace in the Brazilian hog market resumed increasing in the first fortnight of May. According to Cepea collaborators, higher demand from wholesalers and retailers to replenish inventories and the nearness of Mothers’ Day, when pork meat sales usually increase, contributed for this scenario. Besides, Brazilian pork exports were firm in that period, increasing the demand from slaughterhouses for animals in the domestic market, thus pushing up prices for live hog, pork meat and cuts

 

EXPORTS – According to data from Secex, in the first five working days of May, the daily average of shipments for pork meat was at 5.96 thousand tons, 89.4% up compared to the pace registered in April and more than two-fold the average in May last year.

 

Based on this daily average, in the first five working days of May, Brazil exported 29.78 thousand tons of in natura pork meat, much more than the 15.97 thousand tons exported in the same period of April/2020 (Secex).

 

POULTRY – The Brazilian exports of in natura chicken meat decreased in April, although the daily average of shipments during the month was 8.7% higher than that in March. According to data from Secex, in the 20 working days of April, Brazil shipped 320.8 thousand tons of in natura chicken meat, 1.2% less than that in March and 3.9% down compared to that in April 2019.

 

According to Cepea collaborators, logistic issues may have limited exports last month, in both Brazil and the destination countries, because of the social distancing advice to prevent the coronavirus pandemic from spreading out.

 

Despite the decrease in the volume exported, the revenue received from shipments continues favored by the dollar appreciation. Thus, the exporting sector received nearly 2.53 billion BRL last month, 3.2% more than that in March and 21.3% higher than that in April/19.

 

BRAZILIAN MARKET – Chicken meat prices have been on the rise in Brazil this month, after having dropped steeply in April. The price rises observed for chicken meat are linked to the sales increase in the domestic market, which is usual for the first fortnight of the month, and high exports. Besides, industries’ production and inventories are lower, helping to push up quotes.

 

(Cepea-Brazil)

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