Commodities Shuttle: Market has meat for the end of the year, but the consumer is missing, says consultancy

Payment of the first installment of the 13th, salary for the month, arrival of the end-of-year parties. Everything could take the consumer to the food market at the beginning of December. He remains, however, quite withdrawn, especially in the purchase of meat.

The assessment is by Heloísa Xavier, director of JOX Assessoria Agropecuária. “It’s an inconsistent market for this period of the year. The population’s purchasing power is lacking, and the money that is coming in goes to pay overdue bills and those that are due,” he says.

In the meat sector, beef still has little support in sales, due to promotions of second-rate meat, but the supply of animals is still low. In the chicken and pork sectors, the slaughterhouses are much more stocked.

“The market has meat, but the consumer is missing.”

This scenario of uncertainty in consumption is reflected in the countryside. After a drop of R$ 11 on Friday (3), when it dropped to R$ 313, the cattle at arroba fat once again recovered on Monday (6) in the São Paulo market, rising to R$ 322, an increase of BRL 9.

Last week’s fall was a sudden but punctual movement, according to Thiago Bernardino de Carvalho, a researcher at Cepea (Center for Advanced Studies in Applied Economics).

The scenario, however, will be one of firm prices. He believes there will be pressure on purchases at the end of the year and, even with the high inflation rate and the loss of income, the consumer will end up opting for proteins, says the researcher.

The biggest difficulty for the consumer, in terms of prices, will continue with beef. In addition to the greater demand at this time of year, which is natural, the supply of cattle will continue to be restricted.

The occurrence of rain in the passage from 2021 to 2022 is better than it was from 2020 to 2021, which allows the rancher to better control their sales.

The supply of cattle is restricted, but productivity has been improving, according to Carvalho. Cattle farmers are better planning their activity in recent years, using new technologies and improving management and management.

Already the adventurers in the sector have problems, due to this rise and fall in prices, he says. In July, the arroba was at R$322, dropped to R$254 at the end of October and returned to R$324 last week.

The Cepea researcher says that the activity is going through a sifting process, with many producers going to soybeans or leasing their land.

Despite the current scenario, he forecasts an improvement in supply, especially after the first half. The cattle raiser is already confined for delivery throughout the year, and there is an increase in productivity.

The scenario for the consumer, however, is delicate. An arroba de boi in the pasture is worth more than the equivalent of an arroba of a matching carcass in São Paulo. This shows greater pressure in the field than current wholesale and retail meat prices.

According to Cepea, a kilo of meat from the matched carcass (butt, front and needle point meat) is worth R$ 20.55 in the São Paulo wholesale market, the highest price since mid-June.

This market still has a very important component to be evaluated: when China returns and how much will it buy.

The Asian country is in a bind as the Chinese learned to eat beef, the middle class expands and the need for imports grows.

For Carvalho, China needs meat, and Brazil is the best market for them, due to the good offer and more affordable prices. It is difficult, however, to predict when the Chinese will return to the Brazilian market. Perhaps they are waiting for the beginning of next year, says the researcher.

China stopped buying beef from Brazil in early September, after the occurrence of two unusual cases of mad cow.

As a result, total exports of fresh, chilled and frozen beef by Brazil dropped to just 163 thousand tons in the accumulated result for October and November. In September alone, exports had totaled 187 thousand tons.

According to Secex (Secretary of Foreign Trade), exports improved in the first week of December, totaling 5,288 tons per business day, 24% above the average volume in November.

For Carvalho, the situation is also delicate for the rancher. Despite a forecast of good prices for the ox, there is no point in insuring the animal. The consumer has no income, and competition from other proteins, with lower costs, is great.

There is a limit to internal raises. The dollar at current levels encourages exports.