Restrained domestic demand of swine prevents more consistent recovery of Brazil’s livestock and wholesale prices

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Wholesale and live pig prices continue to recover in Brazil, but meat flow in the domestic market still suffers, with demanding activities (from restaurants and malls, for instance) working with reduced capacity in much of the country, preventing a more consistent price oscillation. According to data from SAFRAS & Mercado, the average of live kilogram traded in Brazil’s Center-South reached BRL 4.38 on June 24, up 17.1% from BRL 3.74 at the end of April, a period that marked the year’s lows, at the height of the crisis. It is worth mentioning that in the period before the COVID-19 pandemic, the region’s average was BRL 5.15 per kilogram.

The prospect is that the business flow will improve along the chain in the short term as the quarantine easing process takes shape, but news related to the second wave of coronavirus spread will continue on the radar, keeping the market tense, at least until the emergence of a vaccine or an effective treatment to the disease. Government authorities are monitoring the situation, and if the pandemic situation grows worse, new closures are not ruled out.

With the reopening taking place in states, besides the receipt of salaries, wholesale prices may find room for readjustments in the first half of July and then strengthen live pigs with a better replenishment. Moreover, there is a sharp high in beef, which tends to favor pork and chicken, mainly in a crisis environment, with the deterioration of household income.

As for external demand, it is heated and has a positive outlook for the remainder of 2020 due to China, which continues to struggle to make up for its production deficit, also coping with a reduced herd, as a result of African swine fever (ASF). If not for the high flow of exports, Brazil would be in a complicated situation, considering that domestic demand is weak, and a cut in production does not occur immediately. In May, Brazilian pork exports reached the historic monthly mark of 100 thousand tons, a number that may have been repeated in June. According to preliminary data from the Secretary of Foreign Trade (SECEX), until the third week of June Brazil exported 58.903 thousand tons of fresh, chilled, and frozen pork, with a daily average of 4.207 thousand tons.