The Brazilian went on to eat less meat cattle in recent years, which has been worrying cattle ranchers. However the reopening of the Chinese market after the end of the embargo cheered up the sector, which hopes to break a record for exports and projects growth of around 15% in the arroba price this year.

The record of atypical case of mad cow in Marabá (PA)the sixth in the country since 2010, generated apprehension because, in addition to the problem itself, the sector faces historical bottlenecks, according to specialists consulted by the Sheet.

The fear has a clear explanation, according to agronomist Alcides Torres, market analyst at Scot Consultoria.

“China is our great trading partner for everything. Regarding beef, the Chinese own 60% of what we export. That’s why, when Brazil suspends this export, the market collapses”, he said.

Shipments abroad become even more necessary due to the forecast of the Ministry of Agriculture of reduction of 3.4% in the financial result this year in livestock. The cause lies in the drop in the prices of beef and chicken – the third year in a row of loss of income. The financial result should reach R$ 362 billion in the sector.

Revenue from beef should reach BRL 141.6 billion, 6.4% less than in 2022, and chicken meat should reach BRL 104.4 billion (-7%). Already pork should be high.

Livestock farmers project that the price of an arroba (15 kilos) —currently oscillating between R$270 and R$285, depending on the market— will reach somewhere between R$320 and R$340 in the coming months.

According to Torres, the internal market does not have enough strength to embrace the production of beef, mainly in a period of drop in consumption due to economic difficulties.

“The consumption of 35 kilos [ano] per inhabitant dropped to 25 kilos due to the pandemic, and is still in a recovery process.”

The expectation is that the country will have record exports this year. Data from Abrafrigo (Brazilian Association of Refrigerators) show that exports rose 42% last year compared to the previous year, with total revenue of US$ 13.09 billion.

“Exports should be very good this year and probably the value of the arroba will rise again for the cattleman. I do not believe that this period in which China was closed will interfere in the total volume and in the total value exported by Brazil”, said the professor from USP (University of São Paulo) Marcos Fava Neves, specialist in agribusiness.

Nabih Amin El Aouar, president of the Association of Nelore Breeders in Brazil, said that the ideal would be for the bovine arroba to return to the prices practiced at the beginning of last year, between R$ 320 and R$ 340. He believes that the reopening of the market in Asia will contribute to this.

“The price was between R$270 and R$280 and, one day after the announcement of the end of the embargo, it had already improved to something like R$285, which is why we believe in a price acceleration bias”, he said.

President of Assocon (National Association of Intensive Livestock), Maurício Velloso said that 2023 is marked by the “rock bottom” of the livestock cycle and that this represents an opportunity for investments.

“If replacement and arroba values ​​experience their low limits, condemning sellers to negative margins, at the same time it is a formidable opportunity to leverage herds, precisely because of the low values ​​of animals for replacement, whether for breeding, recreating or fattening” , said Velloso.

“In this way, the scenario of scorched earth for some constitutes an environment of interesting investments for the new phase of the livestock cycle that begins.”

The cycle to which Velloso refers includes the significant slaughter of females, according to Plínio Nastari, president of Datagro consultancy. With the low price of the calf in the market, it is not worth it for the rancher to keep the female and keep producing more calves, which would result in keeping prices low for longer.

“We are witnessing this inversion of the cycle, which is not normal, but due to the reduction in calf prices. In February, 51.3% of females were slaughtered, and normally it is in the range of 25% to 30%” , said Nastari.

CREDIT AND INEQUALITY

Despite the positive expectations, not only with the end of the embargo, but also with the authorization of four more meatpacking plants to export to China, the sector has bottlenecks to be solved and that arouse concern from cattle ranchers.

Among them, according to Velloso, are inequality in the country, with concentration of businesses, and the high level of interest, which “seduce the investor to obtain interesting gains without risk”.

“Perhaps the greatest challenge is the legal uncertainty caused by government leniency with land invasion and disobedience to regulatory frameworks,” he said.

For the president of the nelore breeders’ association, agricultural financing is one of the sector’s bottlenecks, but the main thing is the heterogeneous production spread throughout the national territory.

“Suddenly, you are a qualified producer, I am average and José is terrible, so here in Brazil we have the best cattle rancher in the world and the worst. “

The ABCZ (Brazilian Association of Zebu Breeders), in a statement, said that the end of the Chinese embargo was also important for the correction of prices in the sector and demanded mechanisms that commercially protect Brazilian cattle ranchers.

“In the economic scenario, the bigger the player, the greater the repercussion and the drop in prices in the live cattle market”, said the association.