Cepea, March 2, 2021
CATTLE – The CEPEA/B3 Index for fed cattle (São Paulo State, cash price) stayed around 300.00 BRL all February long. On the last working day of the month, February 26, this Index closed at 303.15 BRL (54.32 USD), 1.1% up in the month and 13.4% up in the year (from Dec. 30, 2020 to February 26, 2021).
Despite the weak demand (domestic and international) in the first weeks of 2021, the low supply of animals ready for slaughter is still underpinning the upward trend of fed cattle prices in the Brazilian market.
However, it is worth to mention that high prices do not mean high profitability to cattle farmers. Although fed cattle prices are currently at record levels, the significant and continuous valuation of important inputs, such as calf and grains, may constrain farmers’ profit margins.
On the other hand, in the Brazilian beef market, agents from slaughterhouses claim difficulties to pass on the price rises of fed cattle to the beef sold in the wholesale market. Since early 2021, beef carcass has been sold at around 19.00 BRL/kg, which accounts for around 285 BRL per arroba (@).
As regards calf, Nellore calves, from 8 to 12 months old, were traded in Mato Grosso do Sul at 2,844.25 BRL (509.63 USD) on February 26, 6.3% up in February and 13.8% up in 2021.
Concerning feed inputs, with the delay in the soybean harvesting in Brazil, the supply of soybean meal continues low, hampering purchases for the short term – many purchasers reported not to have inventories for the long term. Thus, soybean meal quotes have been setting new records, in nominal terms, in the series of Cepea, which began in January 1999.
In the corn market, farmers have been focused on crops and, thus, keep supply low in the spot market.
HOG – Despite the valuations in late February, average price for live hog drops in the month
In spite of the price rises for live hog in the Brazilian market in late February, the average in the month was lower than that in January in most of the regions surveyed by Cepea, due to the devaluations in early February. Demand was weak most of the month, but in late February, slaughterhouses were willing to purchase new batches of ready-to-slaughter hog, bidding higher prices for the animals.
In this scenario, the purchase power of hog farmers against the major inputs consumed in the activity, corn and soybean meal, decreased in February for the fifth consecutive month.
Considering soybean meal, the situation of hog farmers was even worse because of the valuation of this by-product, which, last month, set a new nominal record in the series of Cepea. According to data from Cepea, the low supply of soybean meal in the Brazilian market pushed up quotes for the by-product.
Compared to corn, the decrease in the purchase power of hog farmers was not as steep, once corn prices dropped in February, due to the absence of purchasers in the market.
POULTRY – Lower demand presses down chicken meat prices in late February, but monthly average increases
The average price for chicken meat in February was higher than that in January, despite the devaluations late in the month. This scenario reflected the increase in the demand for chicken meat from both the Brazilian and the international markets. In the second fortnight of the month, demand decreased, leading agents to lower asking prices in order to ensure sales and avoid building inventories.
The higher monthly average in February indicates a recovery in liquidity, which was low in the Brazilian market at the beginning of the year.
In the market of chicken cuts and giblets, the scenario was similar to that observed for most products surveyed by Cepea. According to Cepea collaborators, the domestic supply of some cuts, such as chicken feet, heart and neck, has been low because of the fast exports pace.
In the Brazilian market of beef, prices rose more sharply in February, and, thus, the competitiveness of chicken meat against beef set a new record. On the other hand, in the market of pork meat, prices for special pork carcass were lower than that in January, reducing the competitiveness of chicken meat against this protein for the second consecutive month.