Fed cattle prices rise by 5.5% in July, and average hits a real record for the month

Cepea, August 3, 2020 – CATTLE – The good performance of Brazilian beef exports, favored by the firm demand from China, and low animal supply (confirmed by the lower number of fed cattle slaughtered in early 2020 – compared to the past nine years) underpinned the prices for fed cattle arroba in the Brazilian market in July.

 

FED CATTLE – Between July 1st and 31, the CEPEA/B3 Index for fed cattle (São Paulo State, cash price) averaged 221.36 BRL, 5.5% higher than that in June.

 

Considering only the month of July in the Cepea series, the 5.5% increase registered in July was only lower than that in July 2007, when the monthly valuation hit 6.71%. Besides, the current average is a real record in the Cepea series, which started in 1994. Taking the whole series into consideration, the average in July 2020 is the second highest in the series, only after that registered in December 2019, at 221.57 BRL (deflated).

 

The upward trend of prices observed in Brazil in July was favored by the current high production costs – calf and lean cattle quotes have hit record levels (in real terms), and feed costs have increased too, leading many cattle farmers to reduce the number of animals to be sent to feedlot, lowering the supply of fed cattle ready for slaughter even more.

 

SWINE – Live hog quotes hit nominal records in all the regions surveyed by Cepea in July – in some of them, prices hit real records too. This scenario increased the purchase power of hog growers against the major inputs consumed in the activity: corn and soybean meal. Although the prices for these inputs have been on the rise too, hog quotes rose more sharply in July. The upward trend of quotes was influenced by the low supply of animals within the ideal weight for slaughter.

 

As regards demand, as social distancing advice was relaxed in some important consuming regions in June, the demand for pork meat increased in July. Besides, Brazilian pork exports had a good performance last month too, reducing supply in the domestic market even more.

 

High fed cattle prices also influenced the valuation of pork meat in the Brazilian market in July. In general, the prices of pork products tend to follow the trend observed in the cattle market.

 

POULTRY – Prices for live chicken and chicken meat increased in the Brazilian market in July. Quotes have been on the rise for two consecutive months, after having dropped sharply between April and May because of the covid-19 pandemic, which lowered liquidity.

 

In July, quotes were boosted by the firm demand in the Brazilian market and the low supply of animals for slaughter – agents from slaughterhouses also reported a decrease in the production pace. Besides, the valuations of the major inputs consumed in the activity, corn and soybean meal, helped to push up prices for live chicken and chicken meat.

 

Among the chicken cuts and giblets traded in the wholesale market of the Greater São Paulo, chicken full wing has been the most exported product, according to Cepea collaborators, despite the slow exports pace. This has reduced the supply of this chicken cut in the Brazilian market.

 

(Cepea-Brazil)

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