Fat Ox
After closing out June 2024 at its lowest level since August 2023—with fat cattle priced at R$ 220.70/@—the cattle market underwent a transformation and saw a surge in prices rarely seen in history!
There have been four consecutive months of gains since June 2024. July 24 saw a 4% increase, August 24 a 3% rise, September 24 a 9% increase, and finally October 24 a 18% rise, the strongest monthly gain since Nov/19, with live cattle ending the month at an average price of R$ 301/@ (Cepea Index), the highest price since Sep/22.
And the rise in the animal’s value doesn’t stop there—at least that’s what the futures prices on B3 indicate. On 10/31/24, the price of the animal for late Nov/24 closed at R$ 325.90/@, for Dec. 24, the price is R$ 323.50/@; for Jan. 25, the price is R$ 318.45/@; and for May 25, there are already trades at R$ 308.50/@, in other words, it is possible to sell cattle for May 2025 at a premium of 2.44% over the October 2024 prices. It should be noted that the prices for fat cattle on B3 reflect today’s reality as projected for the coming months and may not hold when those months come to a close.
In our view, the main driver behind this rise in the price of feeder cattle is demand, particularly exports. Beef shipments abroad set successive records during July, August, September, and October, reaching an estimated total of 388,000 metric tons of carcass-weight equivalent in Oct. 2024—9,94% above the record set in Sept. 2024—and accounting for 45% of Brazil’s total demand for that month. Although supply (beef production) declined month-over-month in August, September, and October, the production figures for those months are the highest on record for each month; in other words, supply remains abundant in 2024, but domestic availability has been reduced by the meteoric rise in exports.
Calf
The price of calves followed a similar trend to that of fattened cattle, though with less pronounced increases. At least that is what can be seen when looking at the average price of calves in Mato Grosso do Sul according to the Cepea indicator. There have been three consecutive increases since Aug. 2024, with the average price per head reaching R$ 2,205 in Oct/24 and rising by 4.74% compared to Sep/24—the highest price for calves since May/23.
However, what stood out most in the calf indicators was the average weight of the calves traded during October 2024. The average weight of these animals reached 187.61 kg/head, 8.01% lower than that recorded in September 2024 and the lowest average weight for calves from southern Mato Grosso since March 2020. A possible reason for this decline in the average weight of calves sold may be the drought and wildfires that ravaged southern Mato Grosso from July through October 2024. Consequently, when evaluating the average price per kilogram of calves, the average price in Oct. 2024 was R$ 11.71/kg, the highest level since Apr. 2023.
Corn
In the physical market, corn prices remain firm, renewing the year's highest levels, driven by strong domestic demand, despite a slower pace in the Brazilian export program compared to the same period in 2023.
Tighter supply from sellers, combined with strong domestic demand and the continued rise in the price per arroba of fat cattle, is sustaining the upward trend in corn prices. On Wednesday (October 30, 2024), corn reached R$ 72.67 per bag in Campinas, São Paulo, the highest level recorded since April 20, 2023, for the ESALQ/BM&FBOVESPA Index, accumulating a 13.02% gain in October.
In the physical market, corn prices remain firm, renewing the year's highest levels, driven by strong domestic demand, despite a slower pace in the Brazilian export program compared to the same period in 2023.
Tighter supply from sellers, combined with strong domestic demand and the continued rise in the price per arroba of fat cattle, is sustaining the upward trend in corn prices. On Wednesday (October 30, 2024), corn reached R$ 72.67 per bag in Campinas, São Paulo, the highest level recorded since April 20, 2023, for the ESALQ/BM&FBOVESPA Index, accumulating a 13.02% gain in October.
On the B3 futures market, there is also a positive trend, with contracts hitting new highs for the year. On October 30, 2024, the November 2024 contract (CCMX24) closed the regular trading session at R$ 73.15/bag, up 6.17% from the close on September 30, 2024. Meanwhile, the January 2025 contract (CCMF25) rose by 8.09% between September 30 and October 30, closing on Wednesday at R$ 77.00 per bag on B3.