Cepea, June 1st, 2021
CATTLE – Fed cattle prices weakened in the Brazilian market in May, but continued higher than 300.00 BRL/arroba in São Paulo State (SP). Besides the firm demand from the international market, lower supply of animals for slaughter in Brazil helped to underpin quotes.
Data released by the IBGE in May confirmed that scenario. In the first quarter of 2021 – when the price for an arroba was around 315 BRL –, the number of cattle slaughtered in Brazil totaled 6.64 million, 9.71% down from that in the previous quarter and 10.08% lower than that in the first quarter of 2020.
The number of cattle slaughtered between January and March 2021 was also the lowest in the last 12 years. In the first quarter of 2009, cattle slaughter in Brazil totaled 6.48 million heads, according to data from the IBGE.
Considering only first quarters of previous years, slaughter had been stable since 2015, at around 7 million heads (male and female altogether). On the other hand, between 2013 and 2014, the number of animals slaughtered in the first quarter was higher than 8 million heads (IBGE).
The decrease in slaughter may be linked to the fact that many cattle farmers kept females, aiming to produce calves. It is worth to mention that prices for calf and lean cattle were at record levels in Brazil in the first quarter of 2021.
On the other hand, productivity was a record in the first quarter of 2021. Between January and March, productivity totaled 262.87 kilograms per animal in Brazil, on average, 3.8% higher than that in the same period last year, when it was also at record levels.
Considering the first quarter of 2009, when slaughter was as low as it is this year, the average productivity in Brazil was at 233.73 kilograms per animal, which means that, since then, animals have gained more than 30 kilograms, on average. This scenario confirms that Brazilian cattle farming has had good results from investments in nutrition, genetics, pasture and health.
The highest productivity in the series of IBGE was registered in the third quarter of 2020, when it totaled 272.21 kg, on average, a slight 3.55% up from that between January and March 2021.
HOG: Exchange ratio between live hog and corn is the worst in all times
High corn prices in Brazil have been challenging domestic hog farmers. In the last week of May, the exchange ratio of live hog for corn was the most unfavorable to farmers in all times, considering the series of Cepea, which began in 2004 for live hog.
After increasing slightly in early May, hog prices dropped steeply in the following weeks, due to the slow trading pace for pork meat in the Brazilian market and for exports. The prices for the major inputs consumed in the activity, corn and soybean meal, decreased in May too, but not as much as that for live hog, which reduced the purchase power of hog farmers against these inputs.
Considering the animals sold in the SP-5 region (Bragança Paulista, Campinas, Piracicaba, São Paulo and Sorocaba) and the ESALQ/BM&FBovespa Index for corn (Campinas, SP), on May 25, hog farmers were able to purchase 3.27 kilos of corn by selling a kilo of hog.
This is the second lowest volume in the series of Cepea, only after that on the previous day (May 24), when a kilo of hog was worth 3.21 kilos of corn. On May 25, the exchange ratio for corn was 35.9% wider than that on April 30.
As regards soybean meal, the hog farmers from SP were able to purchase 2.13 kilos of the by-product by selling a kilo of the animal on May 25, 36.1% less than that on April 30.
In the market of pork meat, low liquidity led Brazilian agents to reduce asking prices for pork cuts and carcasses, aiming to fasten the trading pace. Thus, the demand for hogs for slaughter was low, pressing down quotes.
POULTRY: Valuation of live chicken is higher than that for inputs; farmers’ purchase power increases
Prices for live chicken rose in the Brazilian market in May, surpassing the valuations registered for the major inputs consumed in poultry farming, corn and soybean meal, and boosting the purchase power of poultry farmers. The upward trend of prices in the poultry market is an attempt of the agents from the sector to recover its purchase power, which has been low for months.
With liquidity high in the domestic market of chicken meat, favored by its high competitiveness against beef and pork meat, agents from the poultry sector increased asking prices, aiming to keep up with higher production costs.
However, the prices for beef and pork meat faded in May, due to weak demand. In that scenario, the competitiveness of chicken meat against beef and pork meat decreased at the end of the month.