Cepea, July 16, 2020 – CATTLE – In June, Brazilian beef exports hit a new record for the month, making shipments in the first semester the highest in all times.
This scenario and the low supply of animals ready for slaughter underpinned fed cattle prices in the Brazilian market. In the first fortnight of July, the CEPEA/B3 Index for fed cattle (cash price, São Paulo State) returned to around 220 BRL, the same nominal level from mid-December 2019.
In the international market, the strong dollar – which keeps the Brazilian product competitive abroad –, sanitary issues in some countries that sell beef and the growing demand from China resulted in a record performance for the Brazilian beef exports.
This context favors the performance of all cattle products in Brazil. Cepea calculations in partnership with CNA show that, in the first four months of 2020, the GDP from the Brazilian cattle sector increased by a staggering 8.01%, while that for the agricultural sector grew by a slight 1.71%. Thus, the GDP of the Brazilian agribusiness increased by 3.78% from January to April 2020.
As regards beef shipments (in natura and processed), from January to June, exports totaled 907.69 thousand tons, 9.87% more than that exported in the same period last year and a record for the period, considering Secex (Foreign Trade Secretariat) series, which started in 1997. Considering only the month of June/20 (a monthly record), there was a 3.31% decrease compared to that in May/20, but a 31.6% increase compared to that from June/19.
In June, China received 77.29 thousand tons of the Brazilian beef, and in the first six months of 2020, 364.75 thousand tons. Thus, this year, China has imported 40.18% of the total volume Brazil exported in the period, against 17.74% in the first semester of 2019.
Considering imports from Hong Kong and China altogether, this share grows to 57.18%, accounting for 518.72 thousand tons of the product in six months. In the same period last year, these destinations purchased, altogether, 317.75 thousand tons of the Brazilian beef, accounting for 38.46% of the total volume Brazil exported in that period.
Egypt, the third major destination for the Brazilian beef, has purchased 55.4 thousand tons of the product this year (until June), accounting for 6.11% of the total amount Brazil exported. This volume accounts for only 10.68% of all the amount purchased by China and Hong Kong this year.
BRAZILIAN MARKET – The CEPEA/B3 Index for fed cattle oscillated in the first fortnight of July, closing at 217.85 BRL (40.48 USD) on July 15 – on July 14, the Index closed at 221.90 (41.55 USD), the highest level, in real terms, in all Cepea series, which started in 1994 for this product – values were deflated by the IGP-DI. Between June 30 and July 15, however, the Index dropped by a slight 0.25%.
HOG – The upward trend of live hog prices, observed in the Brazilian market since April/2020, has stepped up this month. Live hog valuations have been observed in all the regions surveyed by Cepea.
According to Cepea collaborators, in the first fortnight of the month, some meat processors purchased more animals ready for slaughter, aiming to meet the firm demand from the international market. In the first eight working days of July, the exports pace for the Brazilian pork meat was fast, which has been observed since May, when shipments hit a record. According to a report from Secex (Foreign Trade Secretariat), this month, Brazil has exported 5.19 thousand tons of the product, 25.5% more than that shipped in June.
The high demand for live hog in the independent market reduced the supply of animals within the ideal weight for slaughtered. Thus, agents from the sector have reported to be keeping animals on farms so that they can gain weight, which may have boosted the upward trend of prices in the first half of the month.
For pork meat carcass, prices followed the same trend observed in the live hog market, primarily for special pork carcass, which is the standard carcass for exports. In the market of pork cuts, prices had opposite behaviors. Domestic demand has been lower compared to that from abroad, which constrained price rises for all pork cuts.
EXPORTS – The Brazilian exports of swine products continue high. After hitting a record in May, the volume shipped in June decreased slightly, but, still, it was the second highest volume of pork meat ever exported by the country (considering Secex series, which started in 1997).
According to data from Secex, in June, Brazil exported 95.2 thousand tons of pork meat, 5.9% down compared to that exported in May, but 51.5% more than that shipped in June/19. Despite the high volume, the average price of the product exported decreased, constraining the revenue received by the sector. Cepea collaborators have reported pressure from international purchasers on quotes, mainly from China.
Still, the strong dollar offset the decreases in the prices paid for the Brazilian pork meat. Thus, on the average of June, exports prices averaged 10,763.88 BRL per ton, 14.9% lower than that paid in May, but 27.9% higher than that paid in June/19. In this scenario, the sector received 1.02 billion BRL from exports in June, 19.8% less than that received in May, but almost two-fold (93.8%) that received in June 2019, still according to Secex.
Exports to China, the number one destination for the Brazilian pork meat, decreased by 14.8% from May to June, totaling 45.5 thousand tons last month. Still, this volume is more than two-fold that shipped in June last year.
On the other hand, other countries increased purchases from Brazil in June, limiting the decreases in the total volume shipped in the month. Vietnam and Chile were the countries that most increased imports from Brazil, by 82.6% and 86.6%, respectively, with 2.7 thousand tons sent to Vietnam and 3.8 thousand tons, to Chile.
POULTRY – In June, the Brazilian exports of chicken meat decreased to the lowest volume shipped in 2020, only after that exported in January. Despite lower exports, chicken meat supply has been low in the Brazilian market, indicating that production has been controlled – which means that the measures adopted by the sector in previous months (reducing production pace) have been efficient.
Thus, quotes increased in the Brazilian market in the first fortnight of July, returning to the levels registered in March, indicating that the sector may be offsetting the losses from April to June.
To the international market, Brazil shipped 342 thousand tons of chicken meat (in natura and processed) in June, according to data from Secex (Foreign Trade Secretariat), 14.4% less than the volume exported in May and 11.4% below that shipped in June last year. On the other hand, the revenue from these exports totaled 446.60 thousand USD, 18.3% down compared to that in May and 30.2% lower than that from June/19.
The lower average price (in dollar) for the product exported pressed down revenue from exports. According to agents from the sector, China, primarily, has lowered bidding prices. In June, the average price for the Brazilian chicken meat exported was 1,305.89 USD per ton, 4.5% down compared to that in May and 21.1% below that in June/19.
Last month, the volumes exported to all Brazil’s major partner countries decreased. The steepest decreased was registered for the volume sent to the United Arab Emirates, by 45.4% from May to June, totaling 17.2 thousand tons last month. To Japan, the amount of chicken meat exported decreased by 24.2% compared to that in May, to 32.4 thousand tons. In May, both countries purchased the highest volumes of chicken meat of the year, which influenced the lower purchases in June.