Weaker Brazilian Real offsets high cattle prices

Brazilian cattle prices continued to lift through the first half of 2016, with prices in Brazilian Real terms remaining above year-ago levels, supported by tight availability of finished cattle and strong global demand. In US$ terms, however, Brazilian cattle prices were lower than the corresponding period last year, due to the weaker Brazilian currency.

São Paulo state steer prices averaged R5.16/kg lwt for the first half of 2016, up 6% from the same time last year. In US$ terms, however, these steer prices were 15% lower year-on-year, averaging 139.2US¢/kg for the year-to-June.

Reflecting the weak economy and the Real depreciation, wholesale beef prices in Brazil also slipped in US$ terms. For the January to June period in 2016, forequarters averaged 214.27US¢/kg, down 11% from 2015 levels (239.63US¢/kg). Hindquarters were 63.19US¢/kg (17%) lower year-on-year for the first six months of 2016, averaging 303.48US¢/kg.

Brazilian beef exports for the first half of 2016 reached 572,600 tonnes swt, up 17% year-on-year. The increase in volume was driven predominantly by the surge in shipments to China and Saudi Arabia, a considerable increase in exports to Egypt, Hong Kong and Chile, and the lower average export unit price (down 9% year-on-year, averaging US$3.88/kg for the period).

For the first half of 2016, in comparison to last year:

• • Shipments to Egypt jumped 25%, to 104,600 tonnes swt
  • Volumes to Hong Kong increased 14%, to 101,700 tonnes swt
  • Exports to China lifted 24-fold, to 87,600 tonnes swt
  • Beef exports to Russia dropped 27%, to 65,800 tonnes swt
  • Shipments to Chile jumped 33% to 32,000 tonnes swt
  • Exports to Saudi Arabia totalled 14,836 tonnes swt, up from zero last year