June 28, 2022
The value of Ox is the lowest in the year;  Why is the price of meat not going down?

The value of Ox is the lowest in the year; Why is the price of meat not going down?

The World Organization for Animal Health (OIE) has already reported that the accidents do not represent a risk to the Brazilian cattle production chain. However, China maintained its veto for 47 days.

1. Why has the price of meat decreased in rural areas?

Live cattle prices fell after China stopped buying beef from Brazil, on September 4.

The Asian country imports nearly half of the nearly two million tons of meat that Brazil sends to other countries annually, thus, Every move a nation makes easily affects our prices.

In the field, Aruba cows closed Wednesday (20) at their lowest value of the year: at R$262.90, according to a survey by the Center for Advanced Studies in Applied Economics (Cepea) in Esalq/USP.

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In early September, when the suspension was made, the price was around R$305, and it reached a record high in June (R$322).

2. Will the drop reach the supermarkets?

In supermarkets, it is not yet known whether the drop will come or not.

But in the state of São Paulo, for example, The wholesale price has already decreased because part of what will be shipped to China has been shipped to the domestic market, says Safras & Mercado analyst Fernando Henrique Iglesias, who tracks the sector.

He points out, however, that Most beef is still sitting in cold rooms in slaughterhouses and in containers in ports, with no predicted destination.

Part of the meat has already entered our market and this has been reflected in wholesale. Before August, the price of a kilogram of beef was around R$17 and down to R$14 this week,” says Iglesias.

No retail From the city of Sao Paulo, however, the The price of meat continues to rise. product rose 0.62% in the second week of October, after rising 0.42% in the immediately prior week, data from the Consumer Price Index (IPC) of the Institute for Economic Research (Fipe) shows.

Analyst Guilherme Moreira, IPC Coordinator, says that after China’s suspension, on September 4, cow protein began to gain Minor setbacks already reversed this month. “Therefore, if there was an effect, it was very minimal. In fact, he may have avoided new highs,” he says.

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“This drop may reach the consumer, but not in the same proportion as wholesale. Price increases are passed on more aggressively by retailers. But when they are low, it is not… These transfers end up being more discreet. It’s a glimpse About the company,” emphasizes Iglesias, of Savras.

3. In the long run, how is it?

On the other hand, the analyst says, If China’s suspension extends longerThe trend is for slaughterhouses to start putting more meat on the local market. As more protein becomes available, the trend will be lower prices.

The Ministry of Agriculture decided, on Tuesday (20), that slaughterhouses authorized to export to China are suspending production to the country, which indicated to analysts that The trade stop may last longer.

“No other global consumer can buy what China buys from Brazil in quantity and price. So this meat will end up in the domestic market and the price may drop further,” Iglesias confirms.

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“It is true that the value of beef has to fall a lot to resume consumption. Prices have reached very exorbitant levels,” he adds.

Iglesias points out that wholesale-to-retail reversal takes time. Markets generally expect to run out of stock purchased at a higher price and then replenish the product purchased at a lower price and thus decide to lower the price.

4. What do ranchers do?

Looking at the countryside, the future path of meat prices seems uncertain and Farm owners have already reduced the slaughter of livestock, which has accumulated on farmssays agricultural analyst Jose Carlos Hausknecht, direct partner of MB Associados.

Andre Braz, economist at Getulio Vargas (FGV), points out that “livestock breeders are entering a phase where keeping livestock without slaughtering them can be a strategy to avoid a sharp drop in prices.”

On the other hand, Hausknecht says that Keeping these animals on farms is expensiveEspecially because the bulls in the field are confined between September and October, a system that involves a high expenditure of food.

“The bulls keep eating and within an hour they will stop fat. So, at some point, Industry will have to slaughter. With slaughter, more meat enters the market, and prices may start to fall at retail,” says Hausknecht.

But he emphasizes, however, that all this is uncertain. In the case of a rapid resumption of meat exports to China, for example, protein is not put on the market and prices remain at current levels. “It all depends on the timing of this ban,” he says.