Cepea, August 3, 2021
CATTLE – The average price for fed cattle in São Paulo State (CEPEA/B3 Index, cash) has been higher than that for beef carcass in the wholesale market of the Greater São Paulo (cash) for almost a year.
In July, the average gap between these products hit 15.48 Reais per arroba (15 kilograms or 33 pounds), the widest gap (with fed cattle more expensive) since August 2016, when it closed at 15.97 Reais/arroba.
This scenario confirms that the price rises observed for fed cattle have been higher than that for beef in the Brazilian market. Between June and July, while the average price for fed cattle increased by 0.43%, to 318.63 BRL, for beef, the average dropped by 1.1%, closing at 20.21 BRL/kg (or 303.15 BRL/arroba) in July.
In general, fed cattle prices have been underpinned by the low supply of animals for slaughter – now reduced by the offseason – and the fast exports pace, majorly to China. Also, cattle farmers are trying to pass on the current high production costs (largely related to calf and feed inputs) to fed cattle prices.
On the other hand, for the beef sold in the wholesale market, valuations have been limited by the weak demand in Brazil. Besides the high price levels, the current economic scenario is keeping low the purchase power of most of the population in the country, which ends up consuming cheaper products, such as eggs and pork and chicken meat.
EXPORTS – The increase in the Brazilian exports of beef to the United States has been surprising agents in the national cattle sector. The USA has become the third major destination for the Brazilian beef, after China and Hong Kong, surpassing Chile, which previously held the position.
In June, Brazil sent 8.78 thousand tons of beef to the USA, according to data from Secex. Although this volume is 17.9% lower than that exported in May – when shipments to this destination set a monthly record, totaling 10.7 thousand tons –, it is 18.2% higher than that from June 2020, still according to Secex.
Between January and June 2021, Brazil exported 42.48 thousand tons of beef to the USA, a record, more than two-fold that shipped in the first semester of 2020 (20.1 thousand tons), and much more than the 16.9 thousand tons exported in the same period of 2019.
From Brazil, the USA has been importing majorly processed meet for domestic consumption – a large-sized meat processor in Brazil is exporting beef to the USA for hamburger production.
Besides the fact that, last year, some Brazilian slaughterhouses were certified to export meat to the USA, the weak Real compared to the US dollar makes the national product very competitive and attractive to American purchasers. Also, the current lower number of animals in Australia may be reallocating the American demand to Brazil.
SWINE: Price drops for pork carcass increase the competitiveness of pork meat in BR
Pork meat sales were low in early July, increasing in the second fortnight of the month. Higher liquidity was linked to the increase in the competitiveness of pork meat against its major competitors: beef and chicken meat, due to the devaluation of the product. On the average of July, the competitiveness of pork meat against chicken meat was the highest in the last two years.
As regards pork meat prices, despite the rises in the recent weeks, the steep drops in early July pressed down the monthly average. In the wholesale market of the Greater São Paulo, the average price for special pork carcass in July closed at 9.80 BRL/kg, 5% down from that in June.
Considering the special pork carcass and the whole chilled chicken sold in the wholesale market of the Greater São Paulo, the price gap between these products closed at 2.43 Reais/bag on the average of July, 37.9% down from that in June and the narrowest gap since August/19.
Compared to beef carcass, the price gap in July is the widest in the series of Cepea, which began in 2004, and 2.9% wider than that in June, at 10.41 Reais/kg, with pork carcass being cheaper than beef.
Nearer to the price for chicken meat, which is the cheapest among the three of them, and farther from beef prices, the most expensive one, the competitiveness of pork meat increased.
In that scenario, the purchase power of pig farmers against the major inputs consumed in the activity: corn and soybean meal, decreased in July, interrupting the recovery that had been observed since June.
POULTRY: Sharp valuation of live chicken ensures higher purchase power to farmers
The current high prices for live chicken in the independent market increased the purchase power of Brazilian poultry farmers in July. Considering soybean meal, this is the fifth monthly decrease in the exchange ratio for live chicken, and considering corn, the third consecutive monthly decrease.
In the Brazilian market of live chicken, agents were taking advantage of the high liquidity of chicken meat, due to the high domestic demand – since chicken meat is cheap compared to other types of meat –, to increase the asking prices for live chicken. Valuations were linked to the current high production costs, which, besides the feed inputs, are also related to the effects of the lack of rains and higher electric power costs. On the average of the regions in SP, the average price for live chicken in July (until the 29th) closed at 5.75 BRL/kg, a nominal record in the series of Cepea, which began in 2004, and 6.1% higher than that in June.
As for corn, concerned about the productivity of the next harvest, sellers increased the asking prices for prompt delivery. According to the Grains Team from Cepea, the average of the ESALQ/BM&FBovespa Index for corn (Campinas) in July closed at 97.48 BRL/60-kilo bag, 5.8% up from that in June.
On the other hand, for soybean meal, prices faded, reflecting the lower demand for the product. According to the Grains Team from Cepea, the average price for the soybean meal ton sold in the wholesale market of Campinas in July (until the 29th) closed at 2,287.47 BRL, 3.4% lower than that in June.