Areas with Pasture Reduce, but Yield Increases

BRAZIL - The fed cattle activity in Brazil has been investing in yield gains instead of opening new areas of pastures, due to the competition with other crops, such as soybean, corn and sugarcane.
calendar icon 20 February 2014
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According to information from Cepea, elaborated in a partnership with CNA (Agriculture and Livestock Confederation of Brazil), over the last four years, 80% of typical farms surveyed has presented more than one animal per hectare. Before this period, according to IBGE (Brazilian Institute of Geography and Statistics), it was 0.99 head per hectare, at most.

Comparing last IBGE’s census of agriculture, it is observed that, from 1970 to 2006 (most recent data available), the area occupied by crops increased 125%. In the same period, the increase of pastures was only 12%, while the livestock soared 116%. It is worth noting that, from 1985 onwards, the area allocated to the fed cattle activity reduced; however, until 2006, 48% of cultivable land was still of grazing areas.

IBGE data indicate that, from 1970 to 2006, the number of animals per area changed from 0.51 head per hectare to 0.99 head/ha. After this period, Cepea/CNA data indicate that yield at Brazilian pastures continues to increase. From 2010 to 2013, in the 13 states surveyed (Acre, Bahia, Goiás, Maranhão, Minas Gerais, Mato Grosso, Mato Grosso do Sul, Pará, Paraná, Roraima, Rio Grande do Sul, São Paulo and Tocantins), 80% of typical farms presented yield higher than one head per hectare. As for the 20% left, half of it was in the region of Pantanal, in which the low number of animals per hectare is explained by geographical characteristics.

Considering the Brazilian fed cattle market, quotes continued to move up in early February. The ESALQ/BM&FBovespa Index (São Paulo State) for fed cattle closed at 118.27 reais (49.61 dollars) on February 14, upping 2.79% compared to Jan. 31. The increase is still attributed to the limited supply of slaughter-ready animals, due to unfavorable weather conditions (dry weather and high temperatures). As for the demand, most slaughterhouses continue refrained, but the need to fill more urgent delivery windows ends up resulting in purchases at higher quotes than those practiced up until now.

As for the poultry sector, low price levels of chicken and the upward trend of corn quotes have been reducing the purchase power of chicken producers from São Paulo in February. Players surveyed by Cepea say that chicken price drops might be attributed to decreases in the broiler market, a result of a weak demand in January. As for corn, unfavorable weather conditions (extended dry weather and high temperatures), prices rises in the international market and the dollar valuation against real are the main aspects that push up domestic quotes.

Considering the swine market, the purchase power of producers is smaller in this early February, due to price increases of corn, one of the main inputs used in the activity, and the continuity of hog price drops. Corn values have been moving up because of unfavorable weather conditions, international price rises and the dollar valuation against real. (Cepea – Brazil)

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