Markets close 2006 without positive fundaments

Slow trades and negative fundaments marked the Brazilian livestock sector in 2006. The situation got worst due to the uncertainties about the international markets reopening and the Foot and Mouth Disease (FMD) outbreaks in the state of Mato Grosso do Sul.

Domestic prices oscillated expressively during the year. At the beginning of 2006, values were settled at the lowest levels of the last four years, at the minimum of 48.41 reals per arroba. In the second semester, in turn, the arroba reached the highest nominal level since 2003, of 63.00 reals. The support came from the restrict supply. Moreover, the increasing beef prices traded in the wholesale market of Sao Paulo state also contributed for cattle valuations. This upward trend, however, was interrupted in October. Not even the higher exports during the year supported cattle prices.

For beef, prices also presented strong changes in 2006. In June, the steer carcass in the wholesale market of Sao Paulo state got the minimum value - around 1.26 dollar per kilo.

In the pork market, Brazilian growers were also very unhappy with the scenario of 2006. The main reasons are the sanitary problems and commercial and political conflicts between Brazil and Russia. The result was lower exports for the main buyers of pork meat, like Russia, Portugal, Italy and other ones. According to Secex, from January to November, Brazilian exports reduced 60 percent over.

For slaughterhouses, besides the lesser exports, the exchange rate devaluation and the decreasing domestic meat prices marked the hard time of 2006.

In the poultry market, decreasing prices also marked the year of 2006. The focus of bird flu spreading affected in Europa and Asia reduced even more the global consumption of poultry meat. As a consequence, Brazilian exports also decreased. To make things even worst, the Newcastle disease confirmed in Rio Grande do Sul state was another problem to the Brazilian poultry sector.

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