Backon
track
A
fter the contamination of the
Brazilian market of fed-cattle,
reposition and beef, the expec-
tation for 2017 suggests gradu-
al recovery. In 12 months, until
August 17, 2017, prices of fed cattle dropped
17% according to the price indicator at the
Center for Applied Studies on Advanced Eco-
nomics (Cepea), of the Luiz de Queiroz Col-
legeof Agriculture (Esalq). Thepriceof calves
fell 16.1 percent and the inflation, according
totheGeneralPriceIndex–InternalAvailabil-
ity (IGP-DI), of the Getulio Vargas Foundation
Expectation is for a
strongermarket as of
spring 2017 and 2018, if
political turmoil does not
again contaminate the
market
( FGV),was -1.7%.
Data released by the Inter-Union Depart-
ment of Statistics and Socio-Economic Stud-
ies (Dieese) indicate that the price of beef at
consumer level from August 2016 to July
2017 dropped in 16 Brazilian state capital cit-
ies. Palmas, in Tocantins, had the biggest re-
duction, 6.38%. The cities that experienced
the biggest increases include Florianópolis,
in Santa Catarina (10.59%), and Natal, in Rio
GrandeNorte(5.2%).Supplyoutstrippingde-
mand in premium beef and the slower busi-
ness rhythmbetween the cattle farmers and
meat packingplants account for the fall.
For their part, the cattle breeders faced
the adversities stemming from the “Opera-
tion Weak Flesh” enforced by federal police,
the leniency agreement of the JBS compa-
nyand the suspensionof beef importsby the
United States. Furthermore, JBS announced
a disinvestment plan of assets in order to re-
duce thedebts and raise funds. This scenario
exerted pressure over cattle prices fromJan-
uary toJuly2017.
But the smaller supply as of August,
during off-season time, generated difficul-
ties in meeting the scales of the meat pack-
ing plants and pressed prices up in order to
reduce the idle period. Until August 21, the
Cepea fed cattle indicator was pointing to
a monthly recovery in excess of 9% per ar-
roba, to R$ 138, payment at sight. The mar-
gin of the meat packing industry, which had
reached nearly 40% in some periods of the
year, remainedat 25%in lateAugust.
Alex Santos Lopes, analyst at Scot Con-
sultancy,hasitthat,althoughwithoutreturn-
ing the fall registered throughout the year in
nominal values, the cattle market changed
its profile and now shows a trend for gradu-
al increases in value over the second half of
theyear,ifnewpoliticalturmoildoesnotcon-
taminate the scenario. He understands that
the panorama will get back to normal com-
mercialization and price references that will
bemarkedbya typical off-seasonperiod.
The minister of Agriculture, Livestock
and Food Supply, BlairoMaggi believes that
the sector is now in a position to pick up
steam. “Several moves have been focused
on not only consolidating our presence in
the foreignmarket but on strengthening the
relationships of the supply chain in the do-
mestic scenario. We are beginning a newcy-
cle and cattle farming is really on the right
track”, he declares.
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