Data from municipal, state and federal inspections point to the growth of slaughter in 2018. The increase in production is not enough to be a problem for Brazilian animal agriculture due to the exceptional performance of beef exports over the year, keeping domestic supply adjusted even in a scenario of production growth. The trend for the next biennium is different due to the increase in the slaughter of matrices in the middle of last year, which must result in a supply bottleneck in the coming few months. The main indication of this situation is the behavior of prices of replacement cattle, mainly calves, and recent figures point to increasingly sharper prices.
The attached table clearly shows the behavior of slaughter this year. According to data from the Ministry of Agriculture (MAPA), cattle slaughter in October approached the level of 2.95 million head (preliminary numbers), against 2.91 million head in October last year, nearly 1.1% higher. For the whole year, slaughter reached 28.4 million head, while from January through October 2017 slaughter totaled 27.55 million head, an increase of approximately 3.1%. For the last two months of the year, the trend is that slaughterer will exceed the volumes registered in 2017, maintaining the pattern of the rest of the year.
For 2019 the trend for beef is of a more adjusted supply. As mentioned earlier, there was an important increase in the slaughter of matrices in the middle of 2017, the height of the crisis of credibility that hard hit the national cattle industry after Operation Weak Flesh. The predicted dynamic in a simplified way is that birth rate cannot keep up with the growth of demand for replacement animals, resulting in a supply gap. This bottleneck must act as an important support to domestic prices, evaluating that the cost related to replenishment is one of the most significant in all the whole livestock industry.
Of course, the situation of competing proteins will continue as a restriction to more aggressive bullish movements. The fact is that the new economic team will find a great challenge ahead. In general terms, there is no expectation of resuming economic growth at sharp levels, the initial result must be moderate. In this case average consumers must maintain their predilection for products that cause a smaller impact on their average income, and for the meat sector the preference is for chicken, which has the most competitive prices.