Cepea, April 1st, 2021
CATTLE – Calf prices are still rising sharply in the Brazilian market, setting real records in the series of Cepea for this product. In late March, quotes for Nellore calves, from 8 to 12 months old, surpassed 3,000 BRL/head in many of the regions surveyed by Cepea. This scenario is linked to the current calf supply in Brazil, which is lower than demand.
Among the products surveyed by Cepea in the Brazilian cattle chain, calf prices increased the most in March. Between February 26 and March 31, the ESALQ/BM&FBovespa Index for calf (Mato Grosso do Sul) rose by a staggering 8.63%, while the CEPEA/B3 Index for fed cattle (São Paulo) increased by 4.17%.
The same scenario is observed in the annual comparison. Between March/20 and March/21, calf quotes increased by 27%, in real terms, while fed cattle prices rose by 20.7%.
Although prices for fed cattle did not increase as much as that for calf, the current level is a real record in the series of Cepea – in March, fed cattle quotes (SP) surpassed 315 BRL.
HOG – The purchase power of the hog farmers in São Paulo State (SP) against soybean meal increased slightly between February and March. Still, the scenario was the worst for a month of March and one of the most unfavorable to farmers in all Cepea series, which began in 2004. Considering corn, farmers’ purchase power decreased in March for the sixth consecutive month.
Besides the high price levels for feed inputs – which, according to Embrapa, accounted for 82% of all production costs in February –, the weak sales performance of pork meat in the Brazilian market and the consequent devaluation of live hog are concerning the hog farmers consulted by Cepea. This scenario confirms that 2021 may be another challenging year for the Brazilian swine sector.
The devaluations for soybean meal favored the purchase power of hog farmers between February and March, while the price rises for corn added to the steep drops for live hog quotes reduced farmers’ purchase power against this input.
In the market of pork meat, prices of all products decreased in the Brazilian regions surveyed by Cepea in March, reflecting the new restrictive measures to fight the second wave of covid-19 pandemic in Brazil. The new measures reduced the demand from restaurants and other food services for pork meat and constrained families’ consumption by lowering their purchase power.
Besides the current difficulties in selling pork meat in the wholesale market, agents from the sector are also concerned about the scenario in the short and mid terms. Until the end of March, there was no sign of recovery in the domestic demand, and, thus, meat processors and slaughterhouses were revising their slaughter scales, lowering the demand for animals from the independent market.
POULTRY – Prices for chicken meat, beef and pork increased slightly in the first fortnight of March. With similar valuations for these three types of meat, the competitiveness of chicken meat against the other two continued high in that period.
The high price levels for beef and pork meat added to the lower purchase power of the population – worsened by the pandemic and its effects on the economy – kept the domestic sales of chicken meat high in the Brazilian market in that period.
As the second half of the month began and the restrictive measures increased, Cepea collaborators reported lower sales and price drops for both chicken and pork meat. However, despite the sales decrease for chicken meat in some Brazilian regions, low supply in some of them allowed prices to rise in March.
In Toledo (PR), for instance, the average prices for whole chicken, frozen, set nominal records in the series of Cepea, which began in 2004. Besides low supply, prices were influenced by the fast exports pace for chicken meat and the high price levels for beef, which keep chicken meat competitive against this competitor. However, against pork meat, the competitiveness of chicken meat decreased.