In a year (2022) of great ‘instability’, the prices of live cattle fell by more than R$ 46/@; But the industries have made record profits. Can arroba do boi reach R $ 320.00 again in 2023? Appearance
In short, with A scenario marked by changes at the meat market, drop in the price of arroba of the ox and high production costsyear 2022 it was a challenge for the Brazilian cattle rancher. With unstable prices for live cattle, cattle ranchers had to recalculate to ensure beef production for all Brazilians.
Meanwhile, industries have posted record profits and cattle ranchers will ‘foot the bill’. According to the first published analysis, the main the industries had a partial balance sheet considered the best in years, driven mainly by record exports and the non-pass-through of retail markdowns. On the other side, the Boi Gordo Cepea indicator indicated a fall of R$ 46.36/@. And now the cattle?
To get an idea, Live cattle prices fell more strongly in November and returned to their lowest real level since October 19. To give you an idea, the prices that reached their record level in March/22 with an average value of R$ 344.71/@, fell to R$ 283.35/@ in November/22, i.e. a bigger drop of BRL 61.00/@.
Already the year 2023 did not start with many positive expectations in the physical marketas are the industries relatively comfortable stairs and the month has a history of fewer flows in the internal market which is affected by the “beginning of the year accounts”. Therefore, Cepea is done with stability on the first working day of the yearan amount of R$ 286.85/@ – the same amount traded at the end of December.
However, according to the analyst Crops and market Alan Maya, the tendency is for market liquidity to gradually recover over the course of the week. In São Paulo, the slaughterhouse scales remain positioned and thereby act measuredly in negotiations, especially in relation to prices.
OR Director of HN AGRO, Hyberville Netopoints out that the scenario for the arroba prices are expected to hold steady in this first period of the year. “Instead, it is necessary to monitor the trend of domestic demand, since at the beginning of the year there is usually a slow flow of animal proteins given the accounts at the beginning of the year.”, he highlighted in an interview with Agricultural News.
National animal husbandry invests, and slaughtering grows in 2022
The investments made by the national zootechnical sector in technologies (above all in nutrition, genetics, grazing and health) in recent years are currently witnessed by official data, which show a growth in the number of animals slaughtered and increases in productivity.
From January to September, according to information from the IBGE, 22.191 million animals were slaughtered in Brazil, 7.83% more than in the same period in 2021.
In 2021 the export of fresh beef, in volume, it has decreased. It fell due to the interruption of the flow to China, caused by the atypical cases of mad cow disease. However, in 2022, even without the year being complete, exports are a record, both in volume and turnover.
Prices firm on the first Monday of the year
The light movement, typical on Mondays, and well-planned slaughter programs led to stability in the price of arroba. Therefore, the quotation for fat cattle is R$ 280.00/@, for fat cows R$ 267.00/@ and for fat heifers R$ 272.00/@, gross and forward prices. “Boi China” is quoted at R$ 285.00/@, gross and forward price.
In Minas Gerais, prices remain unchanged, reported BRL 280. In Dourados (MS), the quote is BRL 265. In Campo Grande (MS) arroba is indicated in BRL 264/265.
At the same time, in Cuiabá (MT), the fat ox arroba concluded the aforementioned day BRL 250/256. In Água Boa, Barra dos Garças and Cáceres (MT) the arroba was BRL 250/256 punctual. In Goiânia (GO), the arroba was cited a BRL 270, as well as in Mineiros (GO).
What to expect from the bull market in 2023?
OR The Brazilian fat cattle market is in a booming moment, This is what Safras & Mercado consultancy claims. “It is no exaggeration to say that the country is experiencing a zootechnical revolution, with heavy investments in genetics, animal nutrition and refinement of management techniques. The process of price detachment, after allowing more than 30 Brazilian slaughterhouses to export to China, has significantly changed the dynamics of the market”, says the analyst.
The gains in production capacity, after all the investments made, were substantial in 2022, with progressive progress in the supply of replacement animals. The trend is that in 2023 the growth in the offer of animals in the category will be even more remarkable.
“With a less attractive price curve, it is natural that there is an increase in sow slaughter, leading to the cycle reversal process,” he explains.
The expectation is that Brazil will slaughter about 33.6 million cattle next year. The growth is around 3.9% compared to 2022, when 32.34 million heads were slaughtered.
The consequence of the increase in the number of slaughtered animals is quite logical: there will be an increase in beef production. In 2023, Brazil is expected to produce about 9.0 million tonnes of carcass equivalent, compared to a projected production of 8.7 million tonnes of carcass equivalent in 2022.
On exports, Iglesias understands that Brazil is expected to maintain global leadership in beef shipments in 2023without however repeating the spectacular numbers recorded in 2022. “The last months of the current year have served as a warning, with an aggressive process of renegotiation of contracts by Chinese importers”, he underlines.
In 2023, the expectation is to increase the production of beef in China to 7.5 million tons, compared to the production of 7.1 million tons in 2022. That is, there will be 400 thousand tons more between one year and the next year. ‘other. There will be less reliance on imports to meet Chinese domestic demand.
For the churches, the decline in beef prices will cause the share of the population, who have migrated to more accessible proteins, resume consuming your favorite proteins. Therefore, it should have an impact on chicken and pork price formation.
“In this case, the entire sector will have to adapt to this new reality in terms of supply,” concludes the analyst.
Answering the question posed in the title of the content, and recalling that it is the domestic market that consumes around 70% of the beef produced in the country, the recovery of domestic consumption and the change in the livestock cycle could lead to a sharp increase in arroba prices. But it is still too early to tell whether it will return to R$ 320.00/@ levels.
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