Commodities Shuttle: The Yellow Light Turned On, and Meat Industry Estimates 2022 Will Be Challenging

The meat industry, which still has a serious problem to solve this year, due to China’s delay in returning to importing Brazilian beef, sees 2022 as a challenging year.

High interest rates, inflation, unemployment and low consumer income put the sector on alert.

Ricardo Faria, chairman of the board of Granja Faria, stated this Wednesday (27), on BTG Pactual’s AgroForum, that the internal scenario is worrying because higher interest rates make investments difficult, and consumer income will not allow for margin recovery.

For Faria, this scenario mainly affects producers who have confined animals, which generate higher costs. He cites the acceleration of spending on the production of organic eggs, free-range eggs and free-range birds.

In his assessment, the situation is critical and the sector is experiencing one of the worst moments in the exchange relationship, especially with the rise in corn prices.

He assesses, however, that next year’s costs will be lower, due to the estimate of a super grain harvest in the country. Data from Conab (National Supply Company) indicate a record production, close to 290 million tons.

Next year, according to the executive, lights up a yellow light and will be a question mark, especially in the domestic market.

Miguel Gularte, director-president of Marfrig for South America, says that the important thing is that the basic foundation of the sector, demand, will remain above supply, both in the domestic and foreign markets.

Gularte agrees with Faria, however, that 2022 will be a challenging year, given the weak pace of the economy.

The domestic economic scenario, even with the aid of R$400 promised by the government, will hardly promote changes in consumer income conditions, given the high unemployment and high inflation.

The sector will continue to grow as the country opens up new markets. For the executive at Marfrig, exports are important, and the dollar will help in foreign sales.

In addition, Brazil will export to countries that are already in economic recovery, mainly the Asians, which hold 50% of the world’s beef imports. Among them, the executive mentions China, Hong Kong and South Korea, which are important for the Brazilian market.

For Edison Ticle, finance director of Minerva Foods, the internal economy and the low consumer purchasing power lead the industry to not invest.

The domestic market is quite weak and inflation may take a while to retreat. It will be a year of a non-thriving economy, elections and volatility.

As for the current moment, he assesses that the Chinese delay in the resumption of imports is due to commercial difficulties, internal political noise and recently accumulated stocks.

The return will happen. It’s not possible to predict when, but it will be soon. Of course, meat could serve as a bargaining chip in trade negotiations, he says.

The beef sector was encouraged by the information circulated this Tuesday (26) that China had allowed the first landing of stopped meat in the country’s ports. The information, however, was wrong, according to the Ministry of Agriculture. For now, there has been no release.