November 12, 2010

Brazilian beef prices rise amid torrid weather

The drier-than-average weather prevailing so far in Brazil's major beef producing areas has supported beef prices amid sustained demand from both domestic and overseas markets.

The month of November began with record prices of beef, influencing those of other types of meat. In nominal terms, the price of BRL111.43 (US$64.8) per arroba (1 arroba=14.4 kg), set in the Araçatuba market, is a record high in 11 years, lower only than the peak seen in June 2008, a period of strong pre-crisis speculation after  discounting inflation.

In the year, prices of beef have appreciated 34.5%, in spite of the anticipated upcoming rainy season and recovery of pastures, starting in mid November, and prices in the fourth quarter should average 10.3% more than that of the third and 26.8% above that of the last quarter of 2009.

The reflection in prices of other meats is immediate. In the fourth quarter, chicken should appreciate 10% over the previous three months and 8.3% over the same period in 2009, while variations of pork should be respectively 10.8% and 24.5%.

Exports remain strong. In the year to October, revenues from the sales of all types of fresh beef - representing around 90% of the total revenue and 92% of the shipped volume - rose 23.4%, to US$9.1 billion. Against the overall in 10 months in 2009, the volume was 4.2% higher, and the average prices, 18.4%.

The forecast for exports includes a decline in the fourth quarter, due to restrictions on the domestic supply, the drought and the year-end typically increased domestic demand. The annual result, however, should show a 9.5% increase over last year, reaching US$12.6 billion.