Fat cattle retreats R$ 12.50 in the first week of October in SP and the price goes to R$ 280/@, informs Scot Consultoria • Portal DBO

Another week went by without any communication from China about the release of Brazilian beef exports, reports veterinarian Leandro Bovo, partner and director of Radar Investimentos.

“Every day that goes by without news of the partner that absorbs more than 60% of our exports, greater is the downward pressure that industries are able to impose on the physical market”, he says, adding that, in São Paulo, “the business reference is already at BRL 280/@ and there are already industries opening over-the-counter prices below this reference”.

According to data collected this Friday (8/10) by Scot Consultoria, in the first week of October, the price of boi gordo in São Paulo’s squares accumulated a devaluation of 4.3%, or R$ 12.50/@.

Especially this Friday, slaughterhouse buyers in São Paulo ended the week offering less R$2/@ for cattle, which closed at R$280/@ (gross and forward value), informs Scot.

In turn, the cow and heifer ready to slaughter are traded at R$265/@ and R$282/@, respectively.

According to Bovo, in general, the conditions of slaughter schedules for slaughterhouses are quite comfortable and there are already industries that have fixed-term contracts with full October scales.

“All this downward pressure, combined with the recent rise in the dollar (against the real), caused the price of Brazilian cattle to fall even more sharply in dollars, placing us once again in the position of the cheapest cattle in the world among the main exporters ”, emphasizes Bovo, who, even with the surprising absence of a response from China regarding the embargo on the Brazilian product, sees a light at the end of the tunnel for Brazilian exporters.

“With this ‘promotion’ in Brazilian meat, it is very likely that old customers who were unable to buy our product will once again enter the exporting industries’ radar, in addition to a possible increase in volume destined for current trading partners,” says Bovo.

According to Bovo, “food inflation in the world is a reality, the increase in production costs has been brutal” and, therefore, “buyers will certainly not pass up the opportunity to take advantage of the meat shelf in the world’s supermarket on sale”.

“The short term will still be tumultuous and, until the concentration of output of confined cattle and the excess of meat in the cold chambers of the industries has been absorbed by the market, the downward pressure will continue to be great, however, in the medium term, it will be difficult for our arroba in dollars will remain as low as the current one”, he points out, adding that ‘there is light at the end of the tunnel’; “in due course it will become more apparent, with China or without China”.

In the assessment of IHS Markit, the meatpacking industries take advantage of the slaughter scales accumulated over the past few weeks, consisting of offers of lots that would be slaughtered at the end of September and coming from the boitees, to keep out of purchases, seeking to preserve their tight operating margins.

This Friday, in the states of Goiás, Mato Grosso and Minas Gerais, the declines in the indications for purchase of cattle were more accentuated due to the number of plants on collective vacation and with reduced slaughter, informs the IHS.

“Cattle breeders follow adrift in the market. Their margins are hampered by the high costs of nutrition, while the demand for their animals is practically non-existent”, reports the IHS.

Also according to the consultancy’s assessment, the selling point became a hostage of a chaotic scenario.

“There are farmers who claim they already have animals with more than 140 days in the trough and need to leave the lots”, says the IHS, adding the high feed costs do not allow holding the lots when they reach the ideal weight for slaughter.

“In some cases, ranchers deliver the animals even before they reach the fattening point, due to the low availability and high prices of some types of feed”, points out.

In this scenario, the consultancy reinforces, despite the attempts of cattle raisers to resist downward pressure, the adverse conditions of pastures and the high costs of forage and concentrate make it difficult to maintain the strategy aimed at protecting their operating margins.

In relation to cattle futures contracts traded on the B3, all positions registered significant negative variations, still reflecting the absence of China, according to the IHS.

In the Thursday session, the contracts for October/21 and November/21 decreased by R$ 7.50 and R$ 6.85, respectively, to R$ 275.35/@ and R$ 284.30/@.

In wholesale, the slowdown in business persisted this Friday, informs the IHS. “Distributors and retailers continue to limit the pace of purchase and replacement of beef, concerned about irregular sales”, observes the consultancy.

In this context, the prices of cuts of the rear gave way on Friday, while the others stabilized after the falls the day before, according to IHS.

Exports – Regarding foreign sales, despite China’s temporary suspension, domestic beef shipments reached the highest monthly volume this year in September, as the shipment processes were not interrupted, highlights IHS.

According to data from the Foreign Trade Secretariat (Secex), last month, Brazil exported 211.73,000 tonnes of beef, a performance 27.5% higher than the result of September 2020.

In the year 2021 (January-September), total exports grew 2.1% over the same period in 2020, reaching 1.49 million tons.

As recalls the IHS, China was responsible for 59% of the total movement of Brazilian beef, reaching, from January to September this year, purchases of 882.92 thousand tons (5.3% above the same period in 2020) .

In second place, informs the IHS, it goes to the US, which almost doubled purchases of Brazilian protein in 2021 (Jan-Sep), totaling 77,35 thousand tons, 90.5% higher than 2020.

Behind the scenes of the market, says IHS, the expectation is that the Chinese embargo should be withdrawn this Friday (8/10), with the end of the holiday and reduction of internal stocks in the Asian country. However, until the closing of this text, at the beginning of the evening, no official statement was released regarding the end of the trade conflict.

Maximum quotes for this FridayTuesday, October 8, according to IHS Markit data:

SP-Northwest:

cattle at R$ 283/@ (deadline)
cow at R$ 268/@ (deadline)

MS-Gold:

cattle at R$ 274/@ (on demand)
cow at R$264/@ (on demand)

MS-C.Large:

cattle at R$276/@ (deadline)
cow at R$ 266/@ (deadline)

MS-Three Lagoons:

cattle at R$276/@ (deadline)
cow at R$ 266/@ (deadline)

MT-Caceres:

cattle at R$ 268/@ (deadline)
cow at R$ 261/@ (deadline)

MT-Tangará:

cattle at R$ 269/@ (deadline)
cow at R$ 261/@ (deadline)

MT-B. Herons:

cattle at R$ 268/@ (deadline)
cow at R$ 258/@ (deadline)

MT-Cuiabá:

cattle at R$ 266/@ (on demand)
cow at R$ 257/@ (in cash)

MT-Colider:

cattle at R$ 266/@ (on demand)
cow at R$ 256/@ (in cash)

GO-Goiania:

cattle at R$ 266/@ (deadline)
cow R$263/@ (deadline)

GO-South:

ox at R$ [email protected] (deadline)
cow at R$ 261/@ (deadline)

PR-Maringá:

cattle at R$ 286/@ (in cash)
cow at R$ 276/@ (in cash)

MG-Triangle:

cattle at R$ 266/@ (deadline)
cow at R$ 259/@ (deadline)

MG-BH:

cattle at R$ 271/@ (deadline)
cow at R$ 261/@ (deadline)

BA-F. Santana:

cattle at R$ 282/@ (on demand)
cow at R$ 274/@ (on demand)

RS-Porto Alegre:

cattle at R$294/@ (on demand)
cow at R$ 279/@ (in cash)

RS-Border:

ox at R$ [email protected] (in cash)
cow at R$ 279/@ (in cash)

PA-Maraba:

cattle at R$ 271/@ (deadline)
cow at R$ 266/@ (deadline)

PA-Redemption:

cattle at R$ 268/@ (deadline)
cow at R$263/@ (deadline)

PA-Paragominas:

cattle at R$276/@ (deadline)
cow at R$ 266/@ (deadline)

TO-Araguaine:

cattle at R$ 273/@ (deadline)
cow at R$ 268/@ (deadline)

TO-Gurupi:

cattle at R$ 271/@ (on demand)
cow at R$ 266/@ (in cash)

RO-Cacoal:

cattle at R$264/@ (on demand)
cow at R$ 256/@ (in cash)

RJ-Fields:

cattle at R$ 291/@ (deadline)
cow at BRL 276/@ (deadline)

MA-Açailândia:

cattle at R$276/@ (on demand)
cow at R$ 261/@ (in cash)