With low supply and firm demand, daily cattle price hits a new real record in BR

Cepea, November 5, 2020


CATTLE – The CEPEA/B3 Index for fed cattle (São Paulo State, cash price) increased in October in the Brazilian market, hitting 270.00 BRL per arroba (@) at the end of the month, a new real record in the series of Cepea, which began in 1994 (daily prices were deflated by the IGP-DI from September/2020).


On October 30, the Index closed at 278.40 BRL (48.43 USD), a lot higher than the previous record, of 269.87 BRL, registered on November 29, 2019 (on that date, cattle prices were at 231.35 BRL/@, in nominal terms. Between September 30 and October 30, this Index rose by 8.45%. The boost came from the low supply of animals ready for slaughter and firm demand, mainly for exports.


As regards beef, in the wholesale market of the Greater São Paulo, the average price for beef carcass at the end of October was 18.25 BRL/kg, 9.5% up in the month and higher than fed cattle valuations. Still, the daily average was below the current record, registered on November 28, 2019 (at 16.46 BRL/kg, in nominal terms, or 19.20 BRL/kg, in real terms).


Higher prices for beef carcass in the wholesale market show that, besides lower beef supply in the Brazilian market, demand seems to be firm, despite higher unemployment in Brazil and the nearness of the end of the emergency aid.


The demand from the international market continues high. According to data from Secex (Foreign Trade Secretariat), in October, Brazil exported 162.7 thousand tons of in natura beef, 14.28% more than that shipped in September/20, but 4.58% less than that from October/19, when exports hit a record (higher than 170 thousand tons).


From January to October 2020, Brazilian beef exports totaled 1.414 million tons, 15.17% higher than the volume shipped in the same period last year and a record for the first 10 months of a year (Secex).


The revenue received from exports in October was the second highest in 2020, totaling 690.51 million USD, 18.41% higher than that from September/20, but 9.47% below that from October/19. In Real, however, revenue hit a new record, totaling 3.887 billion BRL, favored by the strong dollar. The revenue received in Reais last month was 23% higher than that in September and 36.4% above that in October/19, according to data from Secex.


Between January and October 2020, revenue totaled 6.091 billion USD and 31.49 billion BRL, 24.16% and 65% higher than that from the same period last year, respectively, and both new records.


This amount reflects the higher volume exported and the higher price levels for the national beef sold to the international market. In October, the price for the beef ton exported averaged 4,244.49 USD, 3.61% higher than that from September/20. However, this revenue is still lower than the current record (of 5,272.6 USD/ton, registered in August 2011). The average price in the first 10 months of 2020 closed at 4,330.98 USD/ton, 9.26% higher than that in the same period last year.


HOG – Despite the slower pace in the last week of October, the Brazilian exports of pork meat (in natura) last month were higher than in September. This scenario reduced supply in the Brazilian market, pushing up domestic quotes.


According to a report from Secex (Foreign Trade Secretariat), in October, Brazil exported 77.4 thousand tons of pork meat (in natura), 1.8% more than the amount shipped in September and 23.7% higher than that from October/19. Although the volume exported increased, agents from the sector were slightly frustrated, since they expected a better performance, based on the fast exports pace in the first 16 working days of the month, when the volume shipped totaled 66.9 thousand tons.


The revenue received from exports was favored by the strong dollar and the higher average price paid for the product exported. According to data from Secex, the price for the pork meat exported in October was 2.3 USD/kg, the highest in the last six months. Thus, revenue totaled 1.04 billion BRL, 9.7% higher than that in September and 72.8% above that from October/19.


POULTRY – The Brazilian exports of in natura chicken meat decreased in October, totaling the lowest volume since February 2019. Still, the domestic prices for this protein continued on the rise during the month, boosted by high liquidity in the Brazilian market, primarily because of its record competitiveness against beef and pork meat. In some regions and for some products, current prices in the poultry sector have hit real records in the series of Cepea.


The average price for whole chicken, chilled, traded in the wholesale market of the Greater São Paulo in October was 5.94 BRL per kilo, the highest, in real terms, in the series of Cepea (values deflated by the IPCE from Sept/20) and 5.4% higher than that in the previous month.


EXPORTS – The Brazilian exports of in natura chicken meat totaled 296.6 thousand tons in October, according to data from Secex, 7.3% lower than that from September and the lowest in 20 months. Revenue dropped too, despite the strong dollar, totaling 2.26 billion BRL, 3.6% lower than that from September.


Among the reasons for this exports’ decrease in October are low supply and high liquidity in Brazil. While demand has been firm in the Brazilian market, agents from the poultry sector have low or even no inventories.





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