September 2, 2010

Brazil's meat prices seen to advance in Q3

Dry weather has been continually pushing Brazilian meat prices to soar until year-end, leading producers Central West of the country to make early withdrawals.

The inability to keep the ox in the pasture for longer results in supply shortage of live cattle in the market, besides increasing the production costs. Thus, the forecasts for the third quarter prices compared with the second are +5% for beef, +5.1% for chicken meat and +3.2% for pork. For the fourth quarter, new increases of 1.6%, 6.6% and 7.7%, respectively, are expected.

On the demand side, the grounds also reinforce the upward bias to prices. That is because both the domestic demand is under expansion-a reflection of the income growth and the heated Brazilian economy-and Brazilian beef exports have recorded increase.

In the local market, the increased prices of cattle lead to the consumption of alternative products, such as chicken, whose industrial production grew 4.6% in the first six months of the year over the same period of 2009. Despite the greater demand, the supply expansion will be enough to meet the market's demand. Thus, we forecast a 9.3% annual decline in prices of poultry against 2009.

In foreign trade, the meat complex stock prices remain steady-on average, 17.8% higher from January to July 2010 over the same period last year. Thus, although the volume shipped has not grown at rates as strong (+1.6%), export earnings have increased 19.7%.