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Falling Brazilian cattle prices this year and strong demand
for the country's beef exports will widen margins for Brazilian meatpackers in
the short term, according to analysts, although weakness in the domestic market
could dampen those gains.
Live cattle prices edged lower in the Sao Paulo market,
where the "auroba" - a 15-kilo measure used as a benchmark - traded
at an average of 278.79 reais ($52.87) late last week, a significant discount
from the first quarter's 332.23 reais, according to Scott Consultoria, an
Agribusiness Consultant.
“The margins of slaughterhouses that export has improved,”
said Alcides Torres, director of Scot Consultoria. He added that converting
these bigger margins into profits would vary from company to company.
Brazil is home to some of the world’s biggest meatpackers, including JBS SA, Marfrig, and Minerva SA.
Beef prices in Brazil have been dropping on the back of a
higher number of cattle coming to market as well as the more aggressive
negotiating stances adopted by foreign buyers, especially China.
A weaker yuan currency has pushed China, which accounted for
almost 53% of Brazilian beef purchases in September, to press for discounts
from sellers in the South American nation, Safras & Mercado analyst
Fernando Iglesias said.
About 30% of Brazil’s beef production is sent abroad, with
the rest consumed at home. But high inflation in the country has cut into
consumers’ purchasing power, weakening domestic demand for beef and pushing
companies to look to export markets.
Source:
Online/SZK
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