Beef export prices drop; Brazilian cattle market react

The average prices of the beef exported by Brazil fell in the second part of the year, partially in response to the renegotiation of contracts with importers. According to data from the country’s Department of Foreign Trade compiled by consultancy Safras & Mercado, the price per tonne peaked at BRL 6,800 in June. In October, the average price dropped to BRL 5,900.

The country exported 152.6 thousand tonnes of beef (fresh, refrigerated, or frozen) in June when revenue reached R$ 1.4 billion. Last month, the data pointed to the shipment of 188.6 thousand tonnes and earnings of R$ 1.1 billion.

“This [trend] reflects the concern over lockdowns in China, but also toward the devaluation of the Chinese yuan against the dollar, which weakens purchasing power at the largest importer of Brazilian animal protein,” said Fernando Iglesias, an analyst at Safras & Mercado to the press services Valor.

China, he claims, will import less Brazilian beef next year because the country will produce 400 thousand additional tonnes of this protein. “The Chinese are increasing their production to reduce their reliance on imports, a trend that has already been observed with pork and chicken. As a result, the country’s purchases will be lower than in 2022,” he predicts.

Please find below the track record of the volume of beef (HS 0201 and 0202) exported by Brazil between Jan 2019 and Sep 2022. The data is from DataLiner.

Brazil’s Beef exports | Jan 2019 – Sep 2022 | WTMT

Source: DataLiner (click here to request a demo)

Iglesias also notes that Brazilian meatpackers are preparing themselves to deal with international trends by “strongly lowering the price of live cattle in the interior of Brazil.” Valor asked the three most prominent companies in the animal protein market in the country – JBS, Marfrig, and Minerva – for a comment, which they did not offer because they find themselves in the period of silence that precedes the publication of quarterly results or because they cannot comment on market strategies.

Analysts Thiago Duarte and Henrique Brustolin from BTG Pactual included in a report that the deceleration of beef prices follows the entry of the livestock cycle in a scenario of increased supply. But, with the growth in the volume of shipments, they believe that the fourth quarter will be more advantageous for Brazilian meatpackers.

“It is expected that animal supplies will continue to grow while demand from abroad will remain high. Therefore, the major Brazilian beef players appear well positioned to present stronger results beginning in the second half of this year,” they conclude.

According to the two analysts, Minerva, South America’s largest beef exporter, is the best choice for investors because rising supply in Brazil should mitigate the impact of falling margins in the United States. BTG also suggests investing in JBS, the world’s largest beef company. On the other hand, the bank gives Marfrig a neutral rating because the company’s results are more exposed to US beef market fragilities.

In the domestic market, the cattle “arroba” – a standard 15-kilo measure used as a benchmark – in Mato Grosso was traded at around BRL 240, according to the Imea institute. In São Paulo, which houses the largest concentration of exporting plants, contracts have been closed for just over BRL 287 per arroba. At the end of March, prices were at R$352.

Source: Valor Econômico

To read the full original article, please go to: https://valor.globo.com/agronegocios/noticia/2022/11/07/preco-da-carne-exportada-cai-e-afeta-mercado-de-boi.ghtml

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