Higher animal supply presses down quotes in Brazil

Cepea, May 16, 2018 – The ESALQ/BM&FBovespa Index for fed cattle (São Paulo State, cash price) oscillated sharply in the first fortnight of May. That scenario was linked to the turbulent moment the sector is going through in Brazil, mainly because of uncertainties regarding the demand for beef, which makes both the presence of agents in the market and animal supply inconstant. Thus, Cepea observed several trades at different prices in that period.


At the end of the fortnight, however, agents retracted from the market and prices dropped. Higher animal supply, due to dry pastures, led processors to extend slaughter scales, lowering demand.


Between April 30 and May 15, the ESALQ/BM&FBovespa Index for fed cattle (São Paulo State) dropped 1.4%, closing at 138.50 BRL (37.82 USD) on May 15. In that period, the minimum price level for the Index was 138.50 BRL (on May 11 and 15), and the maximum, 145.10 BRL (on May 4).


EXPORTATION – After having the best performance for a first quarter, in natura beef shipments decreased sharply in April. According to data from Secex, the amount exported last month totaled only 70.1 thousand tons, 42% smaller than that in March/18, 0.15% lower than in April/17 and the smallest since April/12, when Brazil shipped 69.2 thousand tons.


SWINE – Live pig quotes continued to decrease sharply in Brazil in the first fortnight of May, pressed down by low domestic and international demands. Slaughterhouses reduced the purchasing pace for new batches in that period, acquiring only the necessary to keep activities going and increasing domestic supply. Pig farmers, in turn, showed difficulty to manage farms operational costs. Many of them supplied lighter animals and sold sows, aiming to reduce production costs and lower animal supply in the Brazilian market.


PORK – With weakened demand, pork prices dropped in the first fifteen days of May as well. The average quote for the special carcass in the Greater São Paulo decreased 1.2%, to 4.86 BRL per kilo on May 15.


POULTRY – Live chicken and broiler quotes reacted in the first fortnight of May in many regions surveyed by Cepea. The boost may be linked to the beginning of a possible balance between supply and demand.


In light of the consecutive price drops for live chicken since December/17, poultry growers reduced hatchery, aiming to lower supply. Besides, broiler sales warmed up in early May, favored by the payment of workers’ wages, which pushed up quotes as well.


In the Greater São Paulo, prices for frozen and chilled broiler rose 31.7% and 23.7%, respectively, between April 30 and May 15, averaging 3.65 BRL and 3.39 BRL per kilo on May 15. In the same region, live chicken prices increased 3.9% in that period, to 2.20 BRL per kilo.


In the wholesale market of São Paulo city, prices for broiler cuts increased in the first fortnight of May as well. Quotes for the chicken thigh and drumstick had the highest rise in that period: 24.9%, at 3.85 BRL per kilo on May 15. Chicken breast prices, in turn, averaged 4.13 BRL, 12.6% up in that period.


In Toledo (PR), however, frozen broiler values dropped 2.8% in the first fortnight of May, at 3.70 BRL per kilo, and chilled broiler quotes, 2%, at 4.02 BRL per kilo.


EXPORTATIONS – As expected by agents from the sector, broiler exportation pace slowed down in April. According to data from Secex, last month, Brazil shipped 255.05 thousand tons of in natura broiler, the smallest amount since January/15, when 247.40 thousand tons were sent to the international market. The volume exported in April was 28.1% lower than in March/18 and 14.1% below that in April/17.





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