Weaker Brazilian Real offsets high cattle prices

21 July 2016

Brazilian cattle prices continued to lift through the first half of 2016, with prices in Brazilian Real terms remaining above year-ago levels, supported by tight availability of finished cattle and strong global demand. In US$ terms, however, Brazilian cattle prices were lower than the corresponding period last year, due to the weaker Brazilian currency.

São Paulo state steer prices averaged R5.16/kg lwt for the first half of 2016, up 6% from the same time last year. In US$ terms, however, these steer prices were 15% lower year-on-year, averaging 139.2US¢/kg for the year-to-June.

Reflecting the weak economy and the Real depreciation, wholesale beef prices in Brazil also slipped in US$ terms. For the January to June period in 2016, forequarters averaged 214.27US¢/kg, down 11% from 2015 levels (239.63US¢/kg). Hindquarters were 63.19US¢/kg (17%) lower year-on-year for the first six months of 2016, averaging 303.48US¢/kg.

Brazilian beef exports for the first half of 2016 reached 572,600 tonnes swt, up 17% year-on-year. The increase in volume was driven predominantly by the surge in shipments to China and Saudi Arabia, a considerable increase in exports to Egypt, Hong Kong and Chile, and the lower average export unit price (down 9% year-on-year, averaging US$3.88/kg for the period).

For the first half of 2016, in comparison to last year:

    • Shipments to Egypt jumped 25%, to 104,600 tonnes swt
    • Volumes to Hong Kong increased 14%, to 101,700 tonnes swt
    • Exports to China lifted 24-fold, to 87,600 tonnes swt
    • Beef exports to Russia dropped 27%, to 65,800 tonnes swt
    • Shipments to Chile jumped 33% to 32,000 tonnes swt
    • Exports to Saudi Arabia totalled 14,836 tonnes swt, up from zero last year

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