Porto Alegre, December 17, 2020 – The scenario for 2021 strongly depends on the behavior of China towards imports, as already discussed in the previous topic. Anyway, the expectation is that China will keep operating in the market next year. The process of herd replenishment is apparently at an early stage and will require some time for this to be reflected in the meat production. However, this is not the only basis of the price curve for the beef industry next year.
Another relevant aspect is the process of replenishment of the Brazilian herd. The price curve in the second half of 2019, and mainly in 2020, led farmers to invest in the herd, which is explained by the price behavior of the replenishment market, which also set a record level this year. This movement signals the retention of females. As we know, animal agriculture is a long cycle activity, and this retention process will be more visible from the second half of 2021 and with even more emphasis in 2022.
As already mentioned, Brazilian slaughter in 2020 is at one of the lowest levels of the decade. The bottleneck in the production chain formed with the slaughter of matrices in mid-2017 is taking its toll, leading to a situation of strong supply restriction at a time marked by excellent export demand. Brazil tends to slaughter approximately 31.95 million head of cattle in 2020, based on data from federal, state and municipal inspections, besides the use of IBGE data as reference. With these numbers, the expectation is that Brazil will produce around 8.67 million tons of beef. For 2021, these dynamics change, with the initial process of replenishment of the Brazilian cattle herd. The trend is that next year around 8.8 million tons of beef will be produced, an increase of approximately 1.7%, compared to the figures for 2020.
Regarding exports, the expectation for the year is for a higher volume of beef shipments. For 2021, these numbers tend to show improvement, with the Asian giant still demanding significant volumes of animal protein. The expectation is that in 2021 Brazil will export around 3.1 million tons of beef in carcass equivalent. In the current year, the exported volume hits nearly 2.98 million tons of beef in carcass equivalent, an increase of approximately 4%.
With these figures, the internal supply of beef tends to reach 5.75 million tons, roughly 0.5% higher. This volume indicates there will be no large supply surpluses in the domestic market, keeping the prices of fattened cattle at a high level. It is always important to mention that the market dynamics would be completely different in the event of a change in China’s purchasing profile, increasing the domestic volume offered, resulting in an inevitable reversal of the price curve.
Agência SAFRAS Latam
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