May 8, 2014
Lean cattle price increases lower Brazilian farmers'' purchase power
Lean cattle price increases together with the price drops of fed cattle have been cutting the purchase power of cattle farmers from São Paulo, CEPEA reports.
In the average of April, it was possible to purchase 1.49 lean cattle selling one fed cattle of 17 arrobas, 5% less compared to March, when the ratio was 1.57 lean cattle.
While the lean cattle traded in Araçatuba, Bauru, Presidente Prudente and São José do Rio Preto cities (São Paulo) registered a 5.7% rise from March to April, the ESALQ/BM&FBovespa Index for fed cattle (São Paulo State) presented a slight decrease of 0.2% in the same period.
Lean cattleprice rises are attributed to the higher demand from feedloters and the weak supply, while for the fed cattle, recent price drops are a result of a pressure from the industry, which claims a decrease of the meat consumption in the wholesale market. These factors might affect the profitability of feedlots. For the time being, Assocon (Brazilian Cattle Feeders Association) data indicate that the intention to put animals in feedlots rose 15% this year, but operators are already considering higher volumes.
Concerning the swine sector, in April, hog prices surpassed those of the same period last year, favouring the purchase power of swine producers compared to corn in Brazil. In the average of this month, hog quotes averaged BRL3.65 (US$1.64) per kilogramme in the SP-5 region (Bragança Paulista, Campinas, Piracicaba, São Paulo and Sorocaba) and BRL3.30 (US$1.49) per kilogramme in the western region of Santa Catarina State, 29.4% and 28% more, respectively, than in April 2013, in nominal terms. In the same comparison, corn quotes upped 18.4% in Campinas (SP) and 16.6% in Chapecó (SC).
In regardto hog, price rises in one year are a result of the smaller supply of finished animals. In the wholesale market, pork values are also higher than one year ago.
As for the poultry market, quotes dropped in April, pressed down mainly by the weak domestic demand. Concerning chicken, prices averaged BRL2.18 (US$0.98) per kilogramme on April 30 in São Paulo State, the lowest level since August 6, 2013, of BRL2.17 (US$0.98) per kilogramme. Not even the increase of exports has brought relief for the scenario, given that price drops of competing meats (beef and pork) have been pressing down chicken values.
Despite price decreases, chicken quotes have been underpinning more during 2014 than in the same period of 2013. Last year, the prevailing trend was decrease in the first four months of 2013. In 2014, values dropped in the first two months, but, in March, they moved up, pushed by the higher demand and the lower supply. Last month, the demand for animals to be slaughtered increased because high beef prices pushed up the broiler consumption and, in regardto supply, the production was affected by very high temperatures, which resulted in several animal deaths. In April, however, new decreases were observed.