Increased supply pushed finished cattle prices down

The arrival of cold weather in Brazil’s south-central region boosted the supply of cattle for slaughter and pushed prices downward. In São Paulo, prices fell by R$ 5/@ over the week, according to consultancy firm Scot. The weighted average across Brazil’s main cattle-producing regions for finished cattle with 30-day payment terms and exempt from the Funrural tax stands at R$ 300.4/@, down R$ 3.4 on the week, ending a four-week upward streak.

Agrifatto reported that the increase in supply extended slaughterhouse bookings by one day, with the national average now at 8 days.

The strength of the real against the US dollar is also likely weighing negatively on finished cattle prices. Exports account for roughly 30% of total demand, and the 4% appreciation of the real in June is hurting exporters’ margins.

The trend was clearly negative in the live cattle futures market, trimming the premiums that had been projected for the second half of the year up until last week. During the week, contracts for the second semester on the B3 exchange dropped by R$ 6 to R$ 9/@.

Wholesale beef prices also trended lower last week, impacted by reduced end-of-month demand. This may shift once wages are paid in July.