January is marked by strong correction in meat prices, with highlight on beef

54

After an accelerated upward movement for the last two months, the situation is drastically changing in January. There are some elements that contribute to the understanding of this situation:

– Slowdown of domestic demand. The last two months have been marked by the peak of animal protein consumption, a situation that undoubtedly helped the strong upward movement. However, this scenario changes dramatically at the beginning of the year, average consumers have a greater degree of indebtedness in this period due to routine costs, such as IPTU, IPVA and school expenses in general. This situation leads to an anemic demand, which also involves the meat industry, with a predilection for more accessible cuts, such as beef forequarter and chicken;

– Declining purchases by China. After a last quarter of strong shipment to the Asian country, the pace of imports slowed down in January in the cases of chicken and mainly beef. For pork, shipments remain at a good level. The last quarter’s  purchases serve to meet the demand during the lunar new year (Jan 25). There is now a natural decline. In addition, there are rumors that Chinese importers are trying to renegotiate Brazilian beef import contracts, complaining about very high prices.

This combination of factors led to a fall in wholesale meat prices, particularly of beef. Concomitantly, the prices of fattened cattle and live chicken also dropped. Owing to the situation of competing proteins, a decline in pig production also happened, albeit in a smaller proportion.