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Beef market monitors China ahead of new price cycle

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Vincent

More than half of the beef Brazil exports goes to China. Because of this, the Asian country should influence a lot the prices of Brazilian cattle breeding in 2022, when the segment enters a cycle of increase in supply. Consultants disagree both on the pace of recovery of the Chinese herd of pigs and up to which level the arroba (a metric unit equal to 15 kilos) of live cattle can go down. In the most pessimistic forecast, the price can fall more than 15% compared to the records registered at the end of last June.According to the indicator of the Center of Advanced Studies on Applied Economics (Cepea), the arroba was at R$312.95 on Friday, a price in line with the projections of consulting firms Agrifatto, Safras & Mercado and Scot. This means that prices in the country have retreated almost 3% since June 28 this year, when they reached a historic high of R$321.90, but are 37.6% above the value recorded in the same period last year and 103% above the level of 2019.Two years ago, both the prices of live cattle and calves began their trajectory of strong appreciation. At the time, besides the availability of replacement animals being greatly reduced, China had entered the market with a voracious appetite for proteins that could replace local pork production, reduced after the country was forced to slaughter almost half of its herd because of an outbreak of African swine fever.According to data from Scot Consultoria, the price of crossbred cattle has risen 120% since July 2019, going from R$1,320 to R$2,900. In the same interval, the arroba of live cattle more than doubled, going from R$154 to last Monday’s R$312.Now, at the same time that the Chinese pig herd is in full recovery and the country is moving to resume, in 2022, the pre-African swine fever production...

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