Demand weakens and beef prices decrease more than fed cattle quotes; volume shipped in 2019 is a record

Cepea, August 20 2019 – CATTLE – Comparing July to the first fortnight of August, the average prices for the beef traded in the wholesale market of the Greater São Paulo dropped more sharply than fed cattle quotes did. Although exports have been at a fast pace, consumption is still low in Brazil (due to the low purchase power of the population) and inventories at slaughter facilities are high, keeping beef quotes at low levels.

 

In the first fortnight of August (1 – 15), the ESALQ/B3 Index for fed cattle (cash price, São Paulo State) averaged 153.14 BRL, stable compared to that in July. Beef carcass quotes, in turn, averaged 10.48 BRL per kilo in the first half of the month, 0.57% down in the same comparison.

 

This scenario indicates that the advantage of beef carcass over fed cattle has decreased. In July, the price gap between beef and fed cattle was at 5 Reais, against 4.06 Reais in the first fortnight of August.

 

EXPORTS – Brazilian beef shipments remained higher than 100 thousand tons in July – for the 13th consecutive month –, similar to that between May 2006 and June 2007, when exports remained higher than that for 14 consecutive months.

 

In light of that, between January and June 2019, Brazil exported 807.78 thousand tons of beef, a record for the period, 21.5% more than the volume shipped in the seven first months of 2018 and 1.47% higher than that between January and July 2007, which in now the second best year for beef exports, after 2019, according to Secex.

 

In July, Brazil shipped 129.09 thousand tons of in natura beef, 15.76% more than that in June/19, but a slight 1.35% down compared to that in the same period of 2018 – it is worth to mention that, between June and July last year, exports increased sharply, due to truckers’ strike in late May, which hampered exports in June/18. Shipments in July/19 had also the best monthly performance since November/18, when Brazil exported 130.6 thousand tons of beef (Secex).

 

HOG – The average prices for pork and poultry dropped in the wholesale market of the Greater São Paulo between July and the first fortnight of August, while beef quotes remained stable. However, prices for the special pork carcass decreased more sharply, increasing the competitiveness of this product against beef and broiler.

 

In July, the average price for the special pork carcass was 7.93 BRL per kilo, against 6.82 BRL per kilo in the first fortnight of August, 14% down. The price drops observed for pork meat in August reflect the high inventories in the wholesale market and the devaluation of live pig.

 

In July, beef carcass was 2.61 Reais per kilo more expensive than special pork carcass, while in the first fortnight of August, that price gap widened to 3.66 Reais per kilo, increasing the competitiveness of pork carcass by 40.2%. Against broiler, the competitiveness of pork meat increased by 29.8%, and the price gap narrowed from 3.32 Reais per kilo in July to 2.33 Reais per kilo in the first half of August.

 

EXPORTS – In July, Brazil exported the largest amount of in natura pork meat in all Secex series (since Jan/1997), considering only the months of July. The volume shipped last month totaled 59.8 thousand tons, 7% larger than the amount exported in June and 5% larger than that from the same period last year.

 

Despite the 12% reduction in the daily average of shipments between June and July and the slight (0.4%) decrease in the price paid for the Brazilian pork meat (in natura) in the international market, the good exports performance in July was favored by the number of working days in the month: 23, against 19 in June.

 

China is still the number one destination for the Brazilian pork meat, having received 23.5 thousand tons of the product in July. From June to July, Brazilian exports to China increased by 15%, according to Secex. The volume exported to Hong Kong, in turn, decreased 6%, in the same comparison. Considering the total exports of swine products, the amount shipped in July totaled 66.91 thousand tons.

 

POULTRY – Broiler meat quotes dropped in most of the regions surveyed by Cepea in the first fortnight of August. According to collaborators, this scenario reflects the slow sales pace in the Brazilian market in the last weeks, which increased inventories in early August.

 

In the wholesale market of the Greater São Paulo, frozen chicken quotes dropped 1.3% between July 31 and August 15, averaging 4.46 BRL per kilo on August 15. As for chilled chicken, prices decreased 3.9% in the same period, averaging 4.39 BRL per kilo on August 15. Concerning live chicken, prices remained stable, averaging 3.26 BRL per kilo in the Greater São Paulo on August 15.

 

EXPORTS – The Brazilian exports of broiler meat (in natura and processed) have been at a fast pace this year. In July, the volume shipped was the largest in the year. Still, exports performance was hampered by the steep decrease in the amount sent to Saudi Arabia and the United Arab Emirates.

 

In this context, Saudi Arabia, which had been the number two destination for the Brazilian broiler meat this year (until June) – only after China –, became the number three destination, surpassed by Japan, which became the number two destination for the national broiler.

 

According to data from Secex, in July, Brazilian broiler exports totaled 387.6 thousand tons, a slight 0.4% up compared to that shipped in June. The volume sent to Saudi Arabia and the United Arab Emirates in July decreased 10% and 29%, respectively, compared to that in the previous month, still according to Secex. This movement was opposite to that observed for China and Japan, to where Brazil sent 6% and 12% more, respectively, in July compared to that in June. Thus, China is still the number one destination for the Brazilian broiler meat.

 

(Cepea-Brazil)

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