Brazilian cattle prices higher, but lower slaughter capacity
16 July 2015
Brazilian cattle prices continued to increase during the first half of 2015, with São Paulo state steer prices at record levels, averaging R4.86 kg/lwt – an increase of 21% year-on-year in Real terms.
In line with steer prices, calf prices (Mato Grosso state) have also reached new highs during the same period, at R6.93 kg/lwt, up 36% on the previous year. The rise in prices continued to be driven by the lack of cattle ready to slaughter and the weaker domestic and international demand for Brazilian beef.
Furthermore, the high cattle prices combined with the ease in demand have led to the closure and temporary shutdown of various beef plants across the country. For the January to June period, 44 beef plants have been closed or temporary closed, resulting in a 13% reduction in the national daily average slaughter capacity. Mato Grosso and Mato Grosso do Sul states (major beef producers) decreased their slaughter capacity by 17% and 23%, respectively (Agrifatto).
The strong reliance of Brazil on markets as Russia and Venezuela, which combined represented 40% of total beef exports in 2014, has also compromised exports so far in 2015. Despite the continued Real depreciation during the first half of the year (down 23% year-on-year, averaging 33USȼ), beef shipments during the first half of the year declined 18%, to 490,794 tonnes swt, with Russia and Venezuela registering the highest declines.
Cattle prices are expected to continue to ease during the second half of the year but will still remain higher year-on-year. Meanwhile, beef shipments are forecast to recover, as domestic demand is expected to remain subdued given the high beef prices.
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