March 12, 2014

The limited supply of slaughter-ready animals in Brazil continued to push up values in February with fed cattle and beef prices also moving up in almost all regions surveyed by Centre for Advanced Studies on Applied Economics (CEPEA).

Brazilian shipments are also helping to reduce the domestic supply. The ESALQ/BM&FBovespa Index (São Paulo State) for fed cattle closed at BRL120.43 (US$51.42) on February 28, upping 4.67% in the month.

Comparing the average of the Index in February 2014, of BRL118.05 (US$50), to that in February last year at BRL98.08 (US$41.50), the increase is significant 20.4%. In real terms, the average in February 2014 is surpassed only by those in November 2011 at BRL118.63 (US$50) and November 2010 at BRL133.31 (US$56.50).

According to preliminary data from Secex (Brazilian Foreign Trade Secretariat), the daily average of in natura beef exports was of 5,700 tonnes, 19% higher than the daily average in January 2014 (of 4,800 tonnes) and 36% above that in February 2013 (4,200 tonnes).

The daily average revenue in the first fortnight of February was US$25.2 million, 21% more than that observed in January 2014 (US$20.9 million) and 29% higher compared to February 2013 (US$19.5 million), according to Secex data.

As for the swine sector, hog and pork quotes tumbled in February. This trend is considered normal at the beginning of the year, when the consumption tends to be smaller, reinforced by significant hot weather. Not even the increase of Brazilian shipments of pork in February was enough to halt the downward trend. Secex data indicate that 31,100 tonnes of in natura pork were shipped in February 2014, 6.5% more than in January, but 10% lower in relation to February 2013.

Considering the poultry market, chicken and broiler quotes soared in Brazil in late February. Price rises are linked to low supply and slight demand increase. Current price levels, however, are still below those verified in the same period of 2013, in nominal terms.

It is worth nothing that, in February 2013, the chicken supply was even smaller due to disincentive effect in the production poultry sector because of high prices of inputs, such as corn and soymeal.