Prices for beef and fed cattle drop in early 2020

Cepea, February 4, 2020 – CATTLE – Beef prices dropped in the Brazilian wholesale market in January. Besides the typical lower demand at the beginning of the year – due to the extra expenses in January –, quotes are adjusting, after the sharp rises observed in late 2019.

 

In January, beef carcass prices averaged 13.40 BRL per kilo (201.00 BRL per arroba) in the wholesale market of the Greater São Paulo, 9.5% down compared to that in December/19.

 

Fed cattle quotes decreased almost as much as beef prices did. Although the current supply of animals ready for slaughter is low in Brazil, slaughter facilities have reduced the trading pace for new batches, due to lower beef sales in the wholesale market – because of both the high price levels for beef and the time of the year. In January, the CEPEA/B3 Index for fed cattle averaged 193.04 BRL, 8.9% down compared to that in December.

 

In light of that, in January, the gap between beef and fed cattle prices was at 7.96 Reais per arroba (beef is more expensive). In December, that price gap was 10.18 Reais per arroba, the widest since June 2018, when it was 12.54 Reais per arroba. In January/19, this gap was 5.35 Reais per arroba. These comparisons were based on the monthly averages, in real terms (deflated by the IGP-DI).

 

HOG – Prices for pork meat dropped in Brazil in January, as well as for beef and broiler meat. In this scenario, the price gap between special pork carcass and whole chicken narrowed, and the competitiveness of pork against broiler increased again – after having decreased in December. However, against beef, pork’s competitiveness decreased, since beef quotes dropped more sharply than that for pork.

 

Pork price drops are linked to the low demand in the Brazilian market and the slower exports pace. In January, prices for the special pork carcass averaged 8.95 BRL per kilo in the wholesale market of the Greater São Paulo, 5.9% down compared to that in December.

 

For the broiler meat traded in the Greater São Paulo, the average price in January was 4.95 BRL per kilo, 6.2% down compared to that in December. According to Cepea collaborators, lower demand increased inventories, pressing down quotes even more.

 

The steepest price drop was registered for the beef carcass, at 9.5% between December and January, averaging 13.40 BRL per kilo in January.

 

LIVE PIG – In January, the purchase power of the pig growers from the interior of São Paulo State decreased against the main inputs used in the activity: corn and soybean meal, since these inputs prices rose during the month, while live pig quotes dropped.

 

Pig prices started the month at high levels, however, the school vacation period and the extra expenses of the population at the beginning of the year lowered liquidity, pressing down quotes. In January, live pig prices dropped 16.8% in the SP-5 region, to 5.29 BRL per kilo on Jan. 31.

 

POULTRY – Liquidity was low and prices were fading in the Brazilian market of broiler meat in January. This scenario was linked to the typical demand decrease at the beginning of every year, due to the lower purchase power of consumers (because of the extra expenses in that period). Besides, the market is still trying to adjust, after the sharp price rises observed in late 2019. The agents consulted by Cepea claim that this scenario has increased inventories at processors and wholesalers.

 

Between December 30 and January 31, prices for the frozen chicken traded in the wholesale market of the Greater São Paulo dropped 13.8%, averaging 4.44 BRL per kilo on Jan. 31. For the chilled chicken marketed in the same region, quotes decreased 12.6%, to 4.47 BRL per kilo on Jan. 31.

 

LIVE CHICKEN – Live chicken prices remained stable in January in the Brazilian market, while corn quotes were on the rise, which reduced the purchase power of the poultry growers from São Paulo State to the lowest level since May 2018. Against soybean meal, growers’ purchase power remained stable, since the prices of this input did not change much last month in the interior of São Paulo.

 

(Cepea-Brazil)

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