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09

2023

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06

Brazil’s Beef Oversupply by the End of the Year

Source:

Estado de Minas

Beef inflation is showing signs of relief for Brazilian consumers after the pandemic. The main factor behind this respite is the increased supply available in the domestic market in 2023, according to analysts.

 

Beef inflation is showing signs of relief for Brazilian consumers after the pandemic. The main factor behind this respite is the increased supply available in the domestic market in 2023, according to analysts.

 

They state that producers took advantage of high prices in recent years to strengthen investments, which led to an increase in production capacity in the country. With more options for consumers, projections indicate that beef, along with other food items, is expected to stay away from the list of major inflation culprits in 2023.

 

From January to April, beef prices recorded four consecutive monthly decreases in the IPCA (National Consumer Price Index). The largest drop was in February (-1.22%), and the smallest was in April (-0.45%).

 

From January to March 2023, cattle slaughter in Brazil increased by 4.7% compared to the same period in 2022, according to the IBGE. In 2023, the internal availability of beef in the country is expected to increase by 6.44% compared to 2022, according to estimates from Safras & Mercado. Price drops, but still high, says economist.

 

A study produced by economists from Santander bank also points to the increased beef supply as responsible for price relief for consumers. The situation is associated with the so-called cattle cycle, with a higher percentage of females being slaughtered this year. The report acknowledges that if meatpacking companies decide to restore margins or if there is pressure from demand due to the Brazilian wage mass, the price drop could be mitigated.

 

However, the perspective is that the increased supply will outweigh other factors, according to the report signed by economists Felipe Kotinda, Daniel Karp, and Gabriel Couto.

 

The analysis suggests that deflation (price decrease) of beef could reach 4% on an annual basis in the IPCA by December. In a statement, Cepea said on 1st Jun. that prices across the entire national livestock chain decreased "significantly" throughout May. Researchers from the institution also indicated that the scenario is mainly linked to the increased animal supply.

 

The increased availability in 2023, especially of females, is "a result of investments made by the livestock sector in recent years," said Cepea.