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Dollar Valuation Off-sets Price Drops for Exported Brazilian Beef

22 August 2013

The average price of beef exported by Brazil dropped by 8.4 per cent in dollar terms over the last 12 months, according to analysis from the Center for Advanced Studies on Applied Economics (Cepea) in Brazil.

The quote was $4,735 per tonne in May 2012, and, in June this year, $4,354 per tonne.

In reais (Brazilian currency), on the other hand, prices are stable (+0.4 per cent): 9,448 reais per tonne in June/13 against 9,410 reais per tonne in May 2012.

This fact shows that the dollar valuation against real has off-set price drops of beef in dollar, CEPEA said.

In 12 months, dollar quotes increase 9.6 per cent, changing from 1.98 reais in May 2012 to 2.17 reais in June 2013.

According to Cepea researchers, price decreases of exported beef may be attributed to the slowdown of global economy, mainly of emerging countries, such as China. In spite of the unfavourable international scenario, Brazil has been able to keep the volume of fresh beef shipped.

In the accumulated results for the first half year, Brazilian beef exports generated $2.75 billion of revenue, a record for the period. As for the total obtained in the first six months of last year ($2.4 billion), the increase was 14.6 per cent.

As for the volume, the total was 620.5 thousand tonnes, upping 22 per cent compared to January-June/2012 (508.200 tonnes) according to Secex (Foreign Trade Secretariat) data.

In Brazil, beef carcase quotes in the wholesale market of Greater São Paulo rose by 6.7 per cent over the last 12 months, changing from 5.93 reais per kilo in May/12 to 6.33 reais per kilo in June this year, in nominal terms.

As for fed cattle, the ESALQ/BM&FBovespa Index (São Paulo market) moved up 6.3 per cent in the same period, changing from 93.13 to 99.00 reais in June.

Cepea said that players are now focused on the Brazilian economy, which shows concerning signs, with low economic growth, despite low levels of unemployment, and revenue gains without yield benefits.

At the end of July, the pace of trades was slow in the fed cattle market. The slaughter-ready animal supply continued lower compared to the demand, bringing difficulties for trades in the beginning of August.

In the swine sector, hog prices moved in late July, mainly in São Paulo. Quotes were hovering around 52.00 reais per arroba (2.77 reais per kilo) until 25 July, and changed to 55.00 reais per arroba (2.94 reais per kilo) on 26 July. On 31 July, some trades were closed at 57.00 reais per arroba (3.04 reais per kilo). According to traders surveyed by Cepea, price rises are attributed to the smaller supply of animals with desirable weight to be slaughtered in SP. In other regions surveyed by Cepea, agents say that the demand for animals has increased and prices have moved up.

In the poultry market, broiler and chicken prices upped in July in most regions surveyed by Cepea.

Most significant price increases of broiler were registered mainly in São Paulo, where the production was slightly smaller due to the decrease of the output of chicks, Cepea-Brazil said.

 

August 2013

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