Brazil cattle prices drop steeply in May - CEPEA

Strong supply is weakening prices
calendar icon 13 June 2023
clock icon 2 minute read

According to a report from CEPEA in Brazil, prices of all products in the cattle chain dropped steeply in May. The values of calves (8-12 months old), slaughter cattle and beef (sold in the wholesale market) dropped steeply in the Brazilian market in May. Price declines, which occurred across the Brazilian cattle chain, are linked to high animal supply at the end of the season.

Higher cattle supply this year, mainly of females, results from both the investments made by the sector in recent years and also the weaning period.

"It is important to consider that official slaughter data show an increase in the number of cows slaughtered along 2022," the report said. "And this trend is being observed this year too, with slaughterers reporting higher shares of females in slaughter scales – according to some agents, in some cases, females account for 50% of all animals slaughtered. And this is due to the devaluations of calves and lean cattle, observed since 2021 and that discouraged ranchers to keep females and produce more animals."

On May 31st, the price of the calves traded in Mato Grosso do Sul closed at BRL 2,224.83/head, a steep 9.8% down along May. The current price level (at around BRL 2,200/head) had not been observed since October 2020, in nominal terms. The monthly average of the calf Index closed at BRL 2,280.33/head, 6.1% lower than that from April and 12.5% below that from May/22, in real terms (monthly averages were deflated by the IGP-DI). This is also the lowest monthly average since November 2019.

Calf devaluations in the past couple of years put some pressure on fed cattle prices, the report said. Despite the high exports of Brazilian beef, higher animal supply leads to lower fed cattle prices.

On May 31st, fed cattle closed at BRL 243.25/arroba (15 kg), a steep 10.4% down in the month and the lowest nominal level since early September 2020

The monthly average price for beef carcass in May closed at BRL 18.17/kg, 5% down from that in April and 10% lower than that in May/22, in real terms.

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