Cepea, September 5, 2017 – CATTLE – Fed cattle prices increased in August in all regions surveyed by Cepea. Drier weather in the first fortnight of the month damaged pastures, reducing the supply of animals raised on pastures and pushing up quotes. Besides, the main Brazilian meat processing company resumed purchases, and other slaughterhouses reopened in the last months, leading companies to increase bidding prices to compete for the available batches and, thus, fill up scales. Between July 31 and August 31, the ESALQ/BM&FBovespa (São Paulo State) fed cattle Index increased 13.89%, closing at 142.96 BRL (45.38 USD) on August 31.
The lack of animals ready for slaughter in São Paulo in August led slaughterhouses from that state to search for animals in other regions, mainly Mato Grosso do Sul, Minas Gerais and Goiás. Thus, the price gap between SP and other regions decreased sharply last month (as SP State is the main consuming center in Brazil, it is the price reference for the rest of the country). In August, the narrowest price gap, at 0.3%, was between the ESALQ/BM&FBovespa Index (SP) and northwestern Paraná. In 2016, that price gap was 2.7% and in the last ten years, 3.4%.
POULTRY – The sharp price drops of broiler in August in the wholesale market of the Greater São Paulo pressed down the averages of frozen and chilled broiler to the lowest levels in 11 years in all Cepea series, which started in 2004 for these products. The monthly average last month was 3.36 BRL per kilo for frozen broiler and 3.38 BRL per kilo for chilled broiler. These averages are only higher than those observed in July and in August 2006, at 3.17 BRL and 3.38 BRL per kilo, respectively – values deflated by the IPCA from July/17.
Compared to the same period of 2016, frozen broiler prices have dropped a staggering 23% in a year in the Greater São Paulo. In Pará de Minas (MG), values decreased 12.2%, and in Toledo (PR), 16.4% in the same comparison. From July to August this year, frozen broiler prices dropped 6.2% in the Greater São Paulo. As for chilled broiler, quotes decreased 2.3% in the same comparison.
Price drops may be linked to the higher chicken supply last month. According to data from Apinco (Brazilian Association of Chick Producers), in June/17, 101.6 million one-day-old chicks were housed in that region, the largest volume in the year so far. Most of that volume has been allocated to exportation, which has been firm. However, availability in the domestic market is currently high as well. Price drops are also linked to quotes of the main inputs used in the activity, corn and soymeal, which have been lower than last year.
SWINE – Inventories of pork cuts increased in August, due to the weakened demand in the main Brazilian regions surveyed by Cepea. Consumption, which has been low since Fathers’ Day in Brazil (Aug. 13), when sales did not meet expectations, decreased even more as the second fortnight of the month began. In that scenario, slaughterhouses reduced the number of slaughters and bid lower prices for the animal.
With lower demand for pork cuts, carcass supply increased in some Brazilian regions as well. Thus, live animal quotes were also affected, and price drops were observed in São Paulo State.
In the SP-5 region (Bragança Paulista, Campinas, Piracicaba, São Paulo and Sorocaba), live swine quotes dropped 4.7% in August, to 3.94 BRL per kilo on August 31. As for pork carcasses, prices of common pork carcass dropped 3.6% in the same period, closing at 5.70 BRL per kilo on August 31, while quotes of special pork carcass decreased 4.1%, to 6.02 BRL per kilo.