Cepea, May 3, 2018 – Fed cattle prices were weakened at the end of April. Considering the monthly averages this year, the ESALQ/BM&FBovespa Index for fed cattle (São Paulo State) has dropped 3.56% in 2018.
In April, the average fed cattle price was the lowest since August 2017, when the arroba was traded at 138.52 BRL, in real terms (values were deflated by the IGP-DI from March/18). Beef carcass quotes, in turn, have decreased 6.3% in the same period, with April price average the lowest since September 2016, in real terms.
Pressure came mainly from weakened beef sales in the Brazilian market, since fed cattle supply for slaughter has not been high. Many agents from the sector claim not to have felt the expected recovery for the Brazilian economy this year yet.
With low domestic demand, the sector has focused on exportations. Dollar rises against Real have favored beef shipments. This year, dollar has increased 3.33%, averaging 3.41 BRL in April/18, 8.6% higher than in April/17 and the highest since June 2016.
Despite the good exportations performance, not all slaughterhouses have had good results from shipments. According to Cepea collaborators, beef destination may highly influence the final revenue from exportations.
SWINE – Pork and live pig purchases continued slow in Brazil in April, pressing down quotes. This scenario has been observed since December/17, when Russia reduced Brazilian pork importations, increasing supply in the domestic market.
In the Greater São Paulo, special carcass quotes averaged 4.92 BRL per kilo last month, 5% lower than in March/18 and 23% below that in April/17. That was also the lowest average, in nominal terms, since July 2013 (at 4.32 BRL per kilo).
As for live pig, between March 29 and April 30, prices dropped 2.8% in the SP-5 region (Bragança Paulista, Campinas, Piracicaba, São Paulo and Sorocaba), closing at 3 BRL per kilo on April 30.
INTERNATIONAL MARKET – The 25% tariff imposition from China on the American pork may favor Brazilian exportations to China, reducing that product supply in the domestic market. However, Brazilian shipments of in natura pork did not have a good performance in April – until the third week of the month, the daily average of shipments was the lowest since December 2015, according to Secex.
POULTRY – The recent decision of the European Union to suspend around 20 Brazilian slaughterhouses from exporting broiler to the bloc has worsened the crisis in the domestic poultry sector.
Live chicken prices have been dropping since early 2018 while quotes for the main inputs used in the activity, corn and soy meal, have increased. With weakened demand in the Brazilian market, broiler prices have been decreasing in the wholesale market as well. Thus, exportations had been an alternative to the sector, although performance has not been so good this year.
In the first quarter of the year, the EU was the seventh main destination for the Brazilian broiler, accounting for 5.7% of all the volume exported in that period.
In April, in natura broiler exportations were weakened. According to data from Secex, until the third week of the month (15 workdays), the daily average of shipments was at 12.8 thousand tons, the lowest in 38 months.
With the slow sales pace in both the domestic and international markets, the downward trend of broiler and live animal prices continued in Brasil – this trend has been observed for five months.
Between March 29 and April 30, chilled broiler prices decreased 12.7% in the Greater São Paulo, at 2.74 BRL per kilo on April 30. Frozen broiler quotes, in turn, dropped 10.3% in that period, to 2.77 BRL per kilo.
With high broiler supply, slaughterhouses reduced activities, pressing down live chicken quotes in almost all regions surveyed by Cepea. The sharpest price drop was observed in São Paulo, where the animal was traded at 2.12 BRL per kilo on April 30, 10% down in the month.