Firm international demand and low animal supply underpin arroba quotes in BR

Cepea, June 2, 2020 – CATTLE – Firm demand from the international market and the low supply of animals ready for slaughter in the Brazilian off-season underpinned prices for fed cattle arroba in May, when the average for the CEPEA/ESALQ Index for fed cattle (cash price, São Paulo State) closed at 201.21 BRL, 0.82% higher than that from April (199.57 BRL).


On the other hand, prices for the beef traded in the wholesale market of the Greater São Paulo were weak, primarily because of the low demand in Brazil. The crisis caused by the coronavirus pandemic reduced the purchase power of many consumers, who seemed to be opting for cheaper animal proteins, such as chicken meat, pork and eggs.


In this scenario, even if the average beef price (wholesale market) was higher than that for fed cattle in May – which has been observed since late 2016, in general –, this advantage decreased last month.


EXPORTS – China has been importing significant beef volumes from Brazil this year, which is boosting national shipments to record levels. This scenario, in turn, offsets the effects of the coronavirus pandemic on the Brazilian cattle market.


Brazilian beef exports continue at a fast pace. According to data from Secex, in May, Brazil shipped 155 thousand tons of in natura beef, a record for the month, 33.4% more than that shipped in April and 28.2% up compared to that from May/2019. Still according to Secex, the daily average of beef shipments in May was at 7.75 thousand tons, against 5.81 thousand tons in April 2020 and 5.65 thousand tons in May/19.


HOG – The trading pace for live hog and pork meat stepped up in May in the Brazilian market. According to Cepea collaborators, higher demand from wholesalers and retailers, who aimed to replenish inventories, added to Mothers’ Day increased liquidity in the Brazilian market of pork meat. Besides, Brazilian pork exports were firm in May, which helped to push up quotes. This scenario, in turn, boosted the demand from slaughterhouses for animals ready for slaughter, pushing up prices for live hog in all the Brazilian regions surveyed by Cepea – the bad scenario faced by the sector between mid-March and April led processors to reduce production and, consequently, pork inventories. With the fast sales increase in early May, slaughterhouses started to purchase more animals in the independent market. Thus, despite the higher prices paid for the main inputs consumed in hog farming, corn and soybean meal, the purchase power of Brazilian hog growers increased in May, since hog prices rose more sharply.


POULTRY – The Brazilian exports of chicken meat were fast in May, according to data from Secex, which reduced domestic supply, primarily of frozen products. Thus, quotes increased in Brazil.


In May, chicken meat shipments totaled 372.5 thousand tons, with a daily average of 18.6 thousand tons, 14.8% higher than that in May/19. According to agents from the sector consulted by Cepea, China has been importing high volumes of the Brazilian meat (chicken, pork and beef).


In the Brazilian market, chicken meat sales were high in May too, since wholesalers and retailers were replenishing inventories. Besides, industries’ production was lower, helping to push up quotes.




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