October 4, 2010

Brazilian cattle prices to be sustained

Brazilian cattle prices are expected to remain high throughout 2010-11, even after the recovery in pastures during the local summer rainy season, as the number of cattle for slaughter is not expected to increase significantly.

Feedlot output (usually concentrated in the September-November period) is expected to be lower than in previous years as a result of the higher feeder steer prices, in addition to rises in prices of other inputs.

In addition, during the current year, a number of bushfires in cattle raising regions have destroyed considerable pasture areas. Coupled with a forecast drought, the lower pasture availability will most likely contribute to reduced finished steer numbers and weights during the forthcoming rainy season.

According to the Brazilian Agriculture Confederation (CAN), Brazil has suffered from low cattle supplies since 2007, as producers were forced in previous years to market their herds (mostly females) due to low margins. Matched with a boom in exports - partly fuelled by a competitive local currency - and rising domestic demand since 2005, Brazilian cattle prices have surged since 2007. Despite prices easing in 2009 due to the economic crisis, prices have since recovered, rising 23% during the calendar year to September.