Cepea, July 2, 2021
CATTLE – The low supply of fed cattle ready for slaughter, the retention of females for calf production and the high demand from China for beef determined the sales pace in the Brazilian cattle market in the first semester of 2021. This scenario underpinned prices in the entire cattle chain.
As regards fed cattle, the average of the CEPEA/B3 Index (São Paulo State, cash price) in June, of 317.28 BRL per arroba (15 kilograms), is a slight 1% lower than that from January 2021, in real terms (values were deflated by the IGP-DI), when it closed at 320.56 BRL. The peak of prices in the first semester was registered in March, when an arroba (15 kg) was worth 326.96 BRL, on average. In that month, the season was ending, but pastures had already been damaged by the lack of rains.
Considering a longer period in the series of Cepea, from 1995 to 2001, it is evident that the devaluations between January and June 2021 are typical for this period of the year.
Thus, prices for fed cattle arroba increased between January and June in only in seven years considering the period from 1995 to 2021. The highlights are 2007 and 2008, when valuations in the first semester were of 6.1% and 15.6%, respectively, the highest for the first six months. It is worth to consider that, in 2007 and in 2008, animal supply was lower than demand, due to the high slaughter of females in previous years, which resulted in sharp price rises for fed cattle.
In 2010, fed cattle prices rose slightly sharp in the first semester too, by 4%, reflecting the low animal supply, which was worsened by the severe drought in central-western Brazil in that year. In 2014, the drought lowered animal supply too, pushing up prices by 4.8% in the first semester. And in 2020, low animal supply added to high demand from China for beef boosted fed cattle prices by 4.1% between January and June.
On the other hand, the devaluations registered between January and June in most of the years are linked to the higher number of animals available in that period, due to the production seasonality in Brazil. Among the steepest prices drops are the ones from 2017 and 2018 of 10.5% and 10%, respectively, due to the increase in the productivity of the national herd, with higher supply and lower domestic demand.
SWINE – The demand for live pig was high in the Brazilian independent market in the first fortnight of June, boosting prices in that period. However, as the second fortnight began, values weakened, due to the sales decrease in both the domestic and the international markets. Still, the valuations in the first half of the month allowed the monthly average to increase compared to that in May, scenario that was observed in most of the regions surveyed by Cepea.
In general, most of June, the supply of pigs within the ideal weight for slaughter was low, while the demand from large-sized industries increased, pushing up prices.
POULTRY – The high competitiveness of chicken meat in the Brazilian market continues to favor domestic sales. Exports have been fast too, which kept inventories lower in June, allowing prices to rise in Brazil for both chicken meat and live chicken.
Prices for one-day-old chicks increased slightly between May and June, following the trend in the poultry sector. For live chicken, the demand from slaughterhouses for animals pushed up prices. In São Paulo State, prices averaged 5.27 BRL/kg in June, 2% higher than that in May and 54% up from that in June/20.
In the market of chicken meat, Cepea collaborators reported that high sales and low inventories allowed prices to rise sharply in June, majorly early in the month. In the second fortnight, although agents expected liquidity to decrease and prices to drop – as usual for this period of the month – liquidity was high, and values decreased slightly. Thus, the average prices for almost all products increased from May to June in all the regions surveyed by Cepea.