Cepea, December 5, 2019 – CATTLE – In November, prices for fed cattle arroba and the beef carcass traded in the wholesale market of the Greater São Paulo hit new real records in the series of Cepea, which started in 1994 for fed cattle and in 2001 for beef (values were deflated by the IGP-DI from October/19). On November 14, the ESALQ/B3 Index for fed cattle surpassed the previous record – at 191.89 BRL, from April 2015 – and, since then, has been rising every day, closing at 231.35 BRL (54.63 USD) on Nov. 29.
For beef carcass, the record was surpassed on Nov. 8, and quotes have been on the rise since then, closing at 15.85 BRL (cash price) on Nov. 29. Between October 31 and November 29, the prices of these products increased 35.5% and 25.9%, respectively. According to Cepea researchers, these rises are linked to the firm demand for beef – from both the Brazilian and the international markets – and the low supply of animals ready for slaughter.
In Brazil, the demand for beef usually increases at this time of the year, when wholesalers replenish inventories to meet the demand for barbecues and the holiday season. The international demand for the Brazilian beef, mainly from China, is also helping to lower supply and push up quotes in the domestic market.
In October, Brazilian beef exports hit a new record, and the number one destination for the product was China – Brazil has been shipping more than 100 thousand tons since July 2018. As regards supply, the increase in female slaughter in recent years has lowered animal availability.
HOG – Prices for live pig, pork meat and cuts increased in the Brazilian market in November, reflecting the low supply of animals ready for slaughter and the firm demand for these products (from both the domestic and the international markets). Valuations have been observed since late September in almost all the regions surveyed by Cepea.
In the Brazilian market, the demand has increased because of the end-of-the-year period, when wholesalers usually build stocks. Moreover, the record price of beef has led consumers to search for other types of meat, with more competitive prices.
As regards the international scenario, higher demand is linked to the numerous cases of African Swine Fever (ASF) in Asia. Because of that, players from that region, mainly from China, have increased their purchases in the international market. It is important to mention that Brazil is the fourth biggest pork exporter in the world.
Concerning live pig quotes, nominal prices have been at record levels in all the regions surveyed by Cepea since November 26, considering Cepea series, which started in March 2002. In Belo Horizonte (Minas Gerais), live pig quotes averaged 5.99 BRL per kilo on Nov. 29, 11.1% up compared to that on October 31.
In the wholesale market of the Greater São Paulo, both common and special carcass prices have also hit nominal records at Cepea series, which started in 2004. Special carcass values averaged 8.93 BRL per kilo on Nov. 29, 13.4% up in the month. Common carcass prices, in turn, rose a staggering 17% in the same period, averaging 8.73 BRL per kilo on Nov. 29.
As for pork cuts, players have reported that the supply of the products most demanded at the end of the year, such as pork leg and shoulder, is limited. In the wholesale market of São Paulo State, boned pork leg values averaged 11.56 BRL per kilo on Nov. 29, for an increase of 17.3% in the month.
POULTRY – The demand for broiler meat was firm in Brazil in November, pushing up quotes. Prices for the frozen full wing have even hit a nominal record in the series of Cepea, closing at 10.11 BRL per kilo between Nov. 19 and 22 – on Nov. 29, the average closed at 10.03 BRL/kg, a staggering 23.7% up compared to that on Oct. 31.
However, the price rises observed for broiler meat were not as sharp as that for beef and pork meat. This scenario favored the competitiveness of broiler meat, helping to increase demand and prices even more.
In the market of one-day-old chicks, values rose too, reaching the highest real level in the series of Cepea (IGP-DI from Oct/19). In November, the average price per animal in São Paulo State was at 1.55 BRL, a staggering 29.7% higher than the real average from Nov/18. According to agents from the sector, higher prices are mainly linked to the control of animals supply – it is worth to mention that the quotes for one-day-old chicks have been rising since mid-2018.
The purchase power of Brazilian poultry farmers against the main inputs used in the activity, corn and soybean meal, decreased from October to November. This scenario was linked to the price drops for live chicken and the valuation of these inputs. Thus, the purchase power of poultry farmers has been decreasing for seven months against soybean meal and for three months against corn.
In this scenario, November has been the most unfavorable month for poultry farmers since February/19. Some of the agents consulted by Cepea expect this scenario to change in the coming weeks and growers’ purchase power to gradually increase. These agents are based on a possible upward trend of broiler prices in the Brazilian wholesale market, which would push up live chicken quotes. In this scenario, the record price levels for broiler meat’s main competitors, beef and pork, may increase the demand for broiler, whose quotes are more competitive.
From October to November, live chicken prices dropped 3% in the Greater São Paulo, averaging 3.17 BRL/kg, the lowest since March/19, when it was 3.13 BRL/kg, in nominal terms. According to Cepea collaborators, the downward trend of quotes is linked to the higher supply of animals ready for slaughter in some places.