Brazil’s meat industry’s balance was very positive in 2020


Porto Alegre, January 29, 2021 – Brazilian exports of animal protein performed well in December, and the overall balance remains very positive. As already previously discussed, the result is a consequence of the strong pace of purchases from China in 2020, seeking to fill the supply gap formed by ASF. The news on the replenishment of the pig herd in China is recurrent, however, meat production will not suddenly increase, pig farming has a cycle that needs to be respected. The most probable is that production begins to show a gradual recovery from the first quarter of 2022.

The expectation is that China will remain active in the international market in 2021, even though USDA points to the growth in pork production by the Asian giant. The exchange rate should keep Brazilian animal protein highly competitive in the international market. By way of comparison, an arroba of fattened cattle costs around USD 75.6 in the United States, while in Brazil the arroba costs just over USD 53, which undoubtedly reflects in the price of the traded meat.

Pork exports were the highlight of the industry’s trade balance, with an emblematic growth of 37.8% compared to last year. In 2020, Brazil shipped nearly 1 mln tons of pork, against 730 thousand tons in 2019. In terms of revenue, the result is even more satisfactory, with roughly 2.25 billion dollars, nearly 43% higher than in the same period last year. China still accounts for around 50% of Brazilian pork exports. This dependence can become harmful when the Asian giant reduces its need for imports, a scenario that can cause an abrupt reversal of the price curve.

The result of monthly beef exports in December was within the market expectations. The result remains positive, with more than 245 thousand tons in carcass equivalent. The highlight remains on beef exports to the Chinese market, with over 130 thousand tons shipped in carcass equivalent. In the total for the year, Brazil exported approximately 2.95 mln tons, an increase of nearly 10% in comparison with the same period last year.

For chicken, the overall performance is more discreet compared to the other two proteins. This movement is justified by a lower volume exported to traditional importers, such as the countries of the Middle East and Japan. With a possible recovery in these markets, the expectation is that the good pace of shipments is resumed. In 2020, Brazil exported around 4.14 mln tons, up 1.0% from the same period last year. Revenue decreased approximately 12.4% due to the exchange rate variation between one year and another, bringing down the average price of Brazilian chicken. It is very important to note that chicken shipments have been satisfactory for some years. Brazil traditionally exports between 4 and 4.3 mln tons, maintaining the leadership of the global exports of this protein.

Brazil had an excellent result in animal protein exports in 2020. However, China is already signaling a better process of herd replenishment than that expected by the market. USDA, in turn, shows differences from the Chinese government’s figures. Understanding these issues becomes a determining factor for the meat sector on a global scale, since there has been investment in livestock to meet the Chinese demand. From the moment that this change in dynamics occurs, the price curve must be reversed, and not only in the Brazilian market.