March 10, 2014

Brazil's beef prices to rise due to hot weather 

Brought about by the unseasonably hot weather which has resulted in a fall in cattle supplies, the price of Brazilian beef is on the rise.

According to a new report from UK commodities analysts Mintec, Brazil experienced the hottest January since record began and the lowest level of rain in two decades. As most cattle are grass-fed this had a knock on effect on cattle supplies, "leading Brazilian prices to reach a record high". 

Mintec said increased demand from within Brazil has exacerbated the situation. 

The hot dry weather is affecting all major beef producing regions, including Sao Paulo, Mato Grosso do Sul and Minas Gerais which, in total, account for almost half of the market supply for meatpackers in Brazil, it added. 

Mintec put cattle calf prices at around BRL4.70 (US$2) per kilogramme in February 2014, a huge increase on the same time last year when they stood at around BRL3.70 (US$1.58) per kilogramme. 

A spokesperson for the Ministry of Agriculture - Livestock and Food Supply, in Brazil, said the increase in live cattle prices earlier this year, compared to the same period last year, was around 20% in the domestic market. It is the reflection of well below average rainfall in the mid-west - which delayed the recovery of pastures and, consequently, the number of finished animals for slaughter. 

However the mid-west is now experiencing above average rainfall, which hinders the flow of animals to slaughter plants. The rainy season in the region will not end until April/May time, he said. Futures prices indicate high values ​​for the month of March, after this setback, until June - historically the month of lowest price of cattle. In the international market, the first export figures reveal no increase in the price of fresh beef. 

He said that in response to these issues, there was no specific action being taken by the government, but explained that there were long-term investment policies in place, "for the breeding herd, renovation of degraded pastures and animal welfare, aimed at increasing the average productivity and profitability of domestic livestock". 

According to the Ministry of Agriculture in Brazil, the Strategic Management Advisory Board (GAB), has predicted that by 2019-20 the domestic consumption of Brazilian beef will be responsible for 50% of the livestock product produced in Brazil.