Purchase power of backgrounding farmers is the highest in almost seven years

Cepea, December 17, 2019 – CATTLE – Cepea calculations show that the prices for fed cattle and calf indicate that the current exchange ratio for calves is one of the most favorable to backgrounding farmers since February 2013, which means that the purchase power of finishing farmers is the highest in almost seven years. In general, quotes for fed cattle arroba and calves have increased this year, but fed cattle prices rose much more sharply.

 

BRAZILIAN MARKETIn the first fortnight of December, the ESALQ/B3 Index for fed cattle dropped 6.35%, to 216.65 BRL (52.75 USD) on Dec. 13. Although the supply of animals ready for slaughter was not high in that period and slaughter scales were long, agents from slaughterhouses stayed away from trades, claiming difficulties to sell beef in the Brazilian wholesale market. Agents from this segment reported that the sharp price rises at the end of the chain in November reduced beef consumption, reflecting on the previous links of the chain.

 

EXPORTS In November, Brazil exported 155.58 thousand tons of in natura beef, 8.75% less than that shipped in October (170.49 thousand tons), but 19.15% more than that from Nov/18, according to data from Secex.

 

The daily average of shipments in November, at 7.78 thousand tons, was higher than that from October (7.4 thousand tons). This indicates that the volume exported in November was not higher than that because of the lower number of working days in the month.

 

The large volume exported added to the strong US dollar resulted in a record revenue. In November, the US dollar averaged 4.16 BRL (the highest, in nominal terms, since the beginning of the Plano Real), leading the revenue from exports of in natura beef to total 3.14 billion BRL, 7.61% up compared to that from October/19 and 60% up compared to that from November last year (Secex).

 

SWINE – Brazilian pork exports have been at a fast pace this year, mainly this semester. Between January and November, Brazil shipped 660.31 thousand tons of the product, a record for the period, according to data from Secex (collected since 1997), 13.7% more than that in 2018 and 4.5% above that from 2017.

 

In November, Brazilian pork exports (processed and in natura) were at a fast pace. Still, shipments were lower than in October, when Brazil exported a record volume. According to data from Secex, Brazil shipped 65.8 thousand tons of pork in November, 8.6% down compared to that in October, but 13.6% more than that from Nov/18.

 

Besides the lower number of working days in November – compared to October –, the monthly exports decrease was linked to the slower shipments pace to China and Hong Kong. Altogether, these two destinations, which are the main purchasers of the Brazilian pork meat, received 63.2% of the entire amount exported in November.

 

To Hong Kong, Brazil exported 13.78 thousand tons of pork meat in November, 8.9% down compared to that in October, but 24.9% up compared to that in November 2018. To China, Brazil shipped 27.81 thousand tons of the product, 2.4% less in the monthly comparison, but more than two-fold that from Nov/18.

 

POULTRY – The Brazilian exports of broiler meat to China increased for the third consecutive month in November, and the volume sent to the Asian country last month was the highest in all Secex series, which started in 1997. Despite the increase in the Chinese demand, Brazilian broiler shipments to all destinations decreased last month, due to the lower number of working days in November (20) against that in October (23).

 

According to data from Secex, Brazil exported 332.1 thousand tons of broiler meat in November, 5.9% down compared to that from October. The daily average of shipments, however, increased 8%.

 

Opposite to Brazil’s main commercial partners (Saudi Arabia, Japan and the United Arab Emirates), which reduced imports, China increased purchases by 14.5% between October and November, totaling 59.2 thousand tons last month and surpassing the previous record of 54.9 thousand tons from May/19.

 

(Cepea-Brazil)

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