Cepea, November 17, 2020 – Fed cattle prices (São Paulo State) continued on the rise in the first fortnight of November, hitting new real records in the series of Cepea. On Nov. 13, the CEPEA/B3 Index for fed cattle (cash price, SP) closed at 291.80 BRL (53.28 USD), 4.8% up in the month. The boost came from low animal supply and high demand for fed cattle, primarily because of the fast exports pace for beef.
The performance of Brazilian beef exports has been good, boosted by sales to China. Between January and October 2020, the Asian country received 685.36 thousand tons of the national product, according to data from Secex (Foreign Trade Secretariat), which accounts for 41.6% of all the volume Brazil has exported this year.
This is the highest volume ever sent to a single country in the first 10 months of a year. Besides, the amount exported to China this year is already 41.13% higher than the volume sent to this destination in the 12 months of 2019.
In October, China imported 84.578 thousand tons of beef from Brazil, 28.5% more than that purchased in Oct/19 and 19.5% up compared to that from Sept/2020. This year, the highest volume exported to the Asian country was registered in July/2020, of 87.021 thousand tons.
High imports from China are linked to the African swine fever (ASF) outbreaks registered in the country since last year – which increased their needs to search for animal protein in the international market – and to the fact that the Brazilian product has been competitive in the international market, mainly because of the strong dollar.
Considering exports to China and Hong Kong altogether, the volume shipped between January and October 2020 totaled 947.81 thousand tons. China/Hong Kong account for 57.53% of all Brazilian beef exports this year, against 45.3% in 2019.
However, shipments to Hong Kong have been lower this year than in 2019. From January to October, Brazil shipped 262.45 thousand tons of beef to this destination, against 284.43 thousand tons in the same period last year (Secex).
HOG – On the average of the first fortnight of November, the price gap between special pork carcass and whole chilled chicken hit a new record, in real terms, in the series of Cepea (deflated by the IPCA from Oct/2020), confirming the lower competitiveness of pork meat against this competitor.
However, comparing pork meat to beef, the price gap has been stable since September, highlighting the influence of the beef market on pork meat prices – beef valuations allow the swine sector to increase pork meat quotes too.
Among the three most consumed types of meat in Brazil, the highest price rise was registered for pork meat. In the first fortnight, the average price for pork meat closed at 13.97 BRL/kg, 10.8% up compared to that in the previous month and a new real record in the series of Cepea.
This valuation reflects the combination of two factors: low supply of animals within the ideal weight for slaughter and high demand from the industry, mainly because of the fast exports pace for pork meat.
EXPORTS – The Brazilian exports of pork meat (in natura) last month were higher than in September. According to a report from Secex (Foreign Trade Secretariat), in October, Brazil exported 77.4 thousand tons of the product, 1.8% more than the amount shipped in September and 23.7% higher than that from October/19.
The revenue received from exports was favored by the strong dollar and the higher average price paid for the product exported. According to data from Secex, the price of the pork meat exported in October was 2.3 USD/kg, the highest in the last six months. Thus, revenue totaled 1.04 billion BRL, 9.7% higher than that in September and 72.8% above that from October/19.
POULTRY – Despite the consecutive valuations for live chicken in the Brazilian market, the prices for corn and soybean meal, which are currently at record levels, reduced the purchase power of poultry farmers in the first fortnight of November. The average prices for corn, soybean meal and live chicken this month have been higher than in October, but inputs prices have increased more sharply than live chicken quotes. It is worth to highlight that the current purchase power of Brazilian poultry farmers is the lowest since May 2018.
In the Brazilian poultry market, both the demand and prices for chicken meat continue firm. Thus, the demand from meat processors for animals for slaughter has increased, pushing up quotes.
As regards corn, although prices dropped in early November, they are still at high levels. In general, high international prices and the strong dollar are keeping exports attractive. Besides, demand has been firm in Brazil. In the market of soybean meal, low supply and firm exports have been underpinning quotes.
EXPORTS – The Brazilian exports of in natura chicken meat decreased in October, totaling 296.6 thousand tons, the lowest volume since February 2019 and 7.3% down compared to that in September, according to data from Secex. Revenue dropped too, despite the strong dollar, totaling 2.26 billion BRL, 3.6% lower than that in September.
Among the reasons for this exports’ decrease in October are low supply and high liquidity in the domestic market. While demand has been firm in the Brazilian market, agents from the poultry sector have low or even no inventories.