Expensive grain drives down beef prices in Brazil

Brazilian ranchers are likely to send fewer livestock to feedlots in the second half of 2022 as feed becomes more expensive, increasing downward pressure on beef prices, REUTERS reported, citing the Minerva Meatpacking Plant CEO on Tuesday.

Rising prices for raw materials used in animal feed, such as corn and soybean meal, are pushing farmers to slaughter cattle instead of fattening them, Fernando Galletti de Queiroz told Reuters.

“We expect there to be fewer fatteners in the second half of the year and this adds to the pressure on producers to sell animals at the moment, which is driving prices down,” Queiroz said.

Feed prices have risen sharply as a result of the Ukrainian crisis. Also pushing prices higher is a shortage in Brazil's soybean crop due to last summer's drought, and expectations for Brazilian corn exports to rise to help cover the global shortfall.

Queiroz added that weaker domestic demand for beef and seasonal factors will also play a role in lower prices. “At the moment, the domestic market is under pressure,” the expert notes, “Therefore, part of the fall in the cost of beef is due to the fact that the domestic market buys less.”

According to the Center for Advanced Study in Applied Economics (Cepea), wholesale beef market sales were so low in May that carcass prices fell 6.3%, the biggest monthly drop since January 2020.