Brazilian beef production will be elevated this year
Due to the retention that started in 2019 and gained momentum in 2020, a significantly increased number of calves and steers ready to enter intensive production systems should reach the market in 2H 2022. Added to the increase in the share of females in slaughter, this should bring about a change in the livestock cycle and consequently increase the supply of slaughter cattle, according to the latest Rabobank report.
"It is important to point out that, with feed prices still expected to be high in 2H 2022, the margins of ranchers operating in the domestic Brazilian market may make placing these cattle on feedlots unfeasible. On the other hand, for the foreign market, particularly China, there are still opportunities. If these young animals are raised on pasture, the supply is more likely to gain strength in 1H 2023," Rabobank analysts said.
In recent years, higher beef prices have made the product less affordable to a segment of Brazilian consumers, resulting in a decrease in the average level of consumption. Due to higher prices and lower consumer purchasing power, per capita consumption is unlikely to return to previous levels in the short term. On the other hand, export demand is strong. A combination of relatively low prices due to the depreciation of the real, the expectation of increased supply in Brazil, and constrained supply in other exporting countries is expected to improve the competitiveness of Brazilian beef in the international market. And China is expected to remain Brazil’s largest export destination until at least 2025.
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