Commodities Shuttle: Release of Retained Meat by China and End-of-Year Demand Raise Beef Prices

The arroba de boi has been gaining support this month in the field. This Wednesday (24), it was at R$ 317 in the São Paulo market, 23% higher than at the end of October.

This acceleration in prices indicates that the market is preparing for the coming weeks, which will have stronger demand. China, by allowing the entry into the country of the 110,000 tonnes of beef stopped at its ports, gives a new signal to the market.

This meat will no longer need to be moved to other countries, which generates a new demand for slaughter in these markets. With the restricted supply of oxen, prices rise internally.

With the increases in recent days, the arroba de boi returns to a level close to the record for the year, which was R$ 322, in July, according to the daily monitoring of Cepea (Center for Advanced Studies in Applied Economics).

The suspension of exports to China by the Ministry of Agriculture, due to two atypical cases of mad cow, caused the price of arroba to drop to up to R$ 254 at the end of October.

Exports, however, have not yet recovered, and are waiting for a Chinese return.

Average daily foreign sales dropped to 4,896 tonnes, 42% less than in November 2020. Prices were also not sustained and fell again in this third week of the month to US$ 4,932 per ton, 0.4% lower than in the previous.

The drop in beef exports allowed for an increase in foreign sales of pork and chicken. The latter had an evolution of 19% this month, compared to the same period in 2020, according to data from Secex (Secretary of Foreign Trade) released this Monday (22).

Fertilizers The projected exchange ratio for the 2022/23 crop remains at the worst levels of recent years in Brazil. This worsening is due to new highs in the prices of fertilizers around the world, according to a report by Itaú BBA.

Supply Highly dependent on imports, Brazil will be one of the countries that will suffer the most from these increases, since China and Russia, suppliers of nitrogen and phosphate, have difficulties in supplying these nutrients.

Geopolitics The Itaú BBA report also highlights the increase in potash prices, which Belarus is the main supplier to Brazil. Sanctions imposed by the United States and the European Union to that country bring uncertainties in the supply.

Recovery Chicken meat imports from Brazil by the European Union have stopped falling. From January to September, Europeans sought 174 thousand tons of this protein in Brazil, 1% more than in the same period in 2020.