Cepea, February 19, 2021
CATTLE - The CEPEA/B3 Index for fed cattle (São Paulo State) has been higher than 200 BRL since May 2020. In the first fortnight of February (less than a year later), this Index surpassed 300.00 BRL, closing at 302.20 BRL (56.15 USD) on Feb. 9, a new record – in both nominal and real terms – in the series of Cepea, which began in 1994 (values were deflated by the IGP-DI). On February 12, this Index closed at 303.00 BRL (55.77 USD), 13.4% up in the year.
The recent valuation of fed cattle is linked to the low supply of animals ready for slaughter – in some Brazilian regions, limited fodder is influencing the availability of finished fed cattle. Besides, some slaughterhouses are working with shorter scales and, thus, end up paying the higher prices asked by sellers.
On the other hand, demand has been weak, in both the Brazilian and the international markets. In the wholesale market of the Greater São Paulo, liquidity is low, which is usual at the beginning of the year, due to the extra expenses of the population. Besides, wholesalers consulted by Cepea have reported difficulties to pass on to the retail market the current high prices of beef.
EXPORTS – The exports pace for the Brazilian beef has been slow, which is typical for this time of the year. China, the number one destination for the Brazilian meat, usually reduces imports early in the year because of the celebrations for the Chinese New Year. It is worth to mention that this Asian country increases imports in October and November, aiming to build inventories for the first weeks of the year.
According to data from Secex, in January, Brazil exported 107 thousand tons of beef, 24.7% down from the volume shipped in December. Considering the same period of previous years, shipments decreased by 21.34% in 2020, by 19.17% in 2019, and by 8.4% in 2018. The last time exports increased between December and January was in 2013, according to Secex.
Compared to January 2020, the volume exported last month was 8% lower, according to Secex. Still, the amount shipped in January 2021 is the highest in all times, only lower than the volumes exported in 2007 and 2020.
In the first five working days of February, the Brazilian exports of in natura beef totaled 23.553 thousand tons, according to data from Secex. The daily average of shipments was at 4.71 thousand tons, against 6.143 thousand tons in February 2020. If this pace continues until the end of the month, Brazil may export 94.214 thousand tons of beef, which would be the lowest volume since June 2018.
HOG: Exports in January are the lowest in 17 months
The Brazilian exports of pork meat decreased sharply in January, totaling the lowest since August 2019. This scenario was linked to the lower purchases from China, the number one destination for the Brazilian pork meat. It is worth to mention that this dependence on sales to this Asian country has been concerning agents from the Brazilian swine sector for some time, leading them to search for new international partners.
According to data released by Secex and compiled by Cepea, in January, Brazil exported 62.2 thousand tons of pork meat (processed and in natura), 24.4% down from the volume shipped in December and 8.6% below that from January/20. That was also the lowest volume exported in 17 months.
Despite the dollar appreciation against Real in January, revenue from shipments was the lowest in 11 months, due to the decrease in the volume exported. On the average of January, revenue totaled 779 million BRL, 19.6% below the amount received in December, but still 14.7% above that from January/20.
Between December and January, exports to China decreased by 27.4%, totaling 32.6 thousand tons. Still according to Secex, China received 52.5% of all the pork meat Brazil exported in January, 2% down from that in December. The possibility of lower sales to China in 2021 is concerning agents in the Brazilian swine sector, since exports help to balance the domestic availability of pork meat, mainly when consumption is weak in the Brazilian market.
BRAZILIAN MARKET IN FEBRUARY – After having decreased in January, the demand for pork meat and live hog increased in the first fortnight of February. Thus, the prices paid to hog farmers for live hog increased in almost all the regions surveyed by Cepea.
POULTRY: Demand increases, and prices rise in the Brazilian market
The Brazilian exports of chicken meat resumed increasing in early February, after the bad performance in January, when the country shipped to the international market the lowest volume in more than two years.
Thus, the domestic prices for chicken meat increased in the first fortnight of February in some of the regions surveyed by Cepea. This scenario brought some relief to agents in the Brazilian poultry sector, who had been working with high inventories and low liquidity since last year.
EXPORTS – According to a report from Secex, in January, the daily average of chicken meat exports (in natura) was 13.4 thousand tons, the lowest since Jan/2019, 15.7% down from that in Dec/2020 and 3% below that in Jan/20. According to agents from the sector, China anticipated purchases from January to December, limiting the volume shipped in the first month of 2021.
On the other hand, in February, exports have increased sharply. In the first week of the month, the daily average of shipments was at 17.9 thousand tons, the highest since May/2020 and 33.4% up from that in January/21. However, this average is still 0.5% below that in Feb/2020.