CEPEA: ESALQ/BM&FBovespa Index at 112.48 reais in December, the highest level since December 2011, amid low supply

Nevin Barich

Nevin Barich

Jan 7, 2014 – Centro De Estudos Avançados Em Economia Aplicada (Cepea)

PIRACICABA, Brazil , January 7, 2014 (press release) – In 2013, high prices and new nominal records were observed in the Brazilian cattle market. The limited supply of calf and fed cattle was the major aspect that underpinned quotes. The firm domestic demand all over 2013 and the high volume of Brazilian beef exports also influenced prices increases.

For the fed cattle, in December, quotes were near the nominal record of Cepea’s historical series, started in 1994. On December 23, the ESALQ/BM&FBovespa Index (São Paulo State) closed at 114.39 reais (48.45 dollars) per kilo, the highest nominal level of 2013 and very close to the record of the series, of 114.48 reais, observed in November 2010.

In regard of beef carcass prices traded in the wholesale market of the Greater São Paulo, the average on December 19, 7.75 reais (3.29 dollars) per kilo, reached a nominal record – Cepea series started in 2001 for this product. As for calf, the ESALQ/BM&FBovespa Index (Mato Grosso do Sul State) reached 874.30 reais (370.31 dollars) in December 23, the highest level of Cepea series for this product, also in nominal terms.

In real terms (deflated by the IGP-DI, Brazil, from November 2013), the average of the ESALQ/BM&FBovespa Index (São Paulo State) in December (until Dec. 23), 112.48 reais, was the highest since December 2011, when the Index was 112.64 reais. The highest average, in real terms, of 131.87 reais, was observed in November 2010.

Data about livestock in Brazil have not been released yet, but agents surveyed by Cepea say that the supply was limited in 2013. In 2012, unfavorable weather conditions reduced the livestock. According IBGE (Brazilian Institute of Geography and Statistics) data, the livestock in Brazil in 2012 was estimated at 211.28 million heads, 0.7% lower than in the previous year.

In regard of the swine market, 2013 was positive for the Brazilian swine sector, in spite of some problems along the way. Hog and pork quotes hit nominal records in the domestic market, dollar valuation against real favored the revenue obtained with exports (mainly in the second semester) and corn quotes dropped significantly, reducing production costs. On the other hand, the decrease of shipments to Ukraine affected the domestic market, pushing up the supply.

Concerning the poultry sector, 2013 has been a good year for players. Chicken and broiler quotes hit the highest nominal levels in the historical Cepea series (started in 2004), corn prices (one of the major inputs used in the activity, along with soybean meal) decreased, favoring the purchase power of chicken producers, and the revenue obtained with Brazilian shipments of in natura broiler hit a record. (Cepea-Brazil)

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