The price of beef experienced its biggest increase in 18 years in August and reached an average of $3,100 per kilo by the end of the third week of this month, according to a report by the Mediterranean Foundation.
Averaging the value of 18 bovine cuts, the report indicated that this price represented a variation of 60% since the beginning of the month. But in the market they estimate that the impact that this increase will have on demand could push prices back.
“The contribution of meat to inflation in August could be in a range between 3.2 and 4 points,” the paper added.
Behind the sharp rise in consumer prices for meat is a large increase in the price of live animals, which was lagging far behind general inflation. Between the third week of July and the third week of August, the price of steers in the Cañuelas Market rose 70%.
But the economic situation put a brake on the rise of the hacienda. “It was too much. The price was not validated at the counter and the farm went down,” said the general secretary of the Argentine Chamber of Slaughterers and Suppliers (CAMyA), Leonardo Rafael.
In this regard, he reported that sales by butchers to butcher shops decreased by 50% in recent days, and to butcher shops by 30%.
Due to the delay that meat had, since from July 2022 to the same month of this year it had risen 71% below general inflation that comfortably exceeds 100%, consumption had climbed from 47 kilos at the end of 2022 to 52 kilos per capita last month, according to data from the Meat Industry and Commerce Chamber (CICCRA). But, now, it is estimated that it could go down again.
The entity’s statement indicates that there are several factors that explain the rise in prices of standing farms.
He pointed out that “a possible imbalance due to seasonal issues between supply and demand for exports, the need to rebuild margins in the feedlots (affected by the Corn Dollar and other factors), and a very complete and rapid past through of the devaluation contributed to this rise. post STEP to farm prices due to retraction and/or less availability of animals, among others”.
In fact, the value of the farm has been falling in recent days. The categories of steers, young steers and heifers, which are consumed in the domestic market, dropped considerably from Friday the 18th of this month, when it reached its peak, to the present. Steers decreased by 8%; steers 7%; and heifers 4.5%.
Faced with this drop in the live kilo, the average carcass that the slaughterers unloaded until last week at $2,100 per kilo, this week has already dropped to between $1,700 and $1,800.
In any case, from the sector they hope that these values of the property will be the floor. While there could be another jump in value if it rains, since producers are going to retain the animals in the field and there will be a shortage of supply.
“Regarding its impact on the family budget, average spending on animal proteins is around 8% of total spending (on average, including the 3 meats, cold cuts, eggs, processed hamburgers),” the report indicated.
The foundation maintained that taking the percentage increase and “working with an increase in consumer prices of this group of products of between 40% and 50%, the contribution to inflation in August could be in a range between 3.2 and 4 percentage points”.
“It is very likely that in August 2023 the biggest jump in prices (in real terms) of bovine meat in at least the last 18 years will be observed and therefore the greatest contribution to inflation of this product in the measurement of official organizations. ”, detailed the entity.
The rise in the price of beef contributed to a large extent to the acceleration of retail inflation in August, especially since the STEP, the 22% devaluation of the official dollar the day after and the uncertainty about the future generated by the electoral result . The expectations of a new devaluation jump generate effects that feed back the inflationary problem by generating production stoppages, preventive price adjustments and retraction of products on shelves, the report highlights, to which are added the increasing government restrictions on imports.
On how you can track the prices of farm and meat, the report is very cautious. “The response of the consumer should be monitored, if it validates the new values or, on the contrary, a retraction of consumption is observed and, on the side of the exporters, if the businesses continue to be profitable at the new prices, with an official dollar of $350 through October.
Prudence is certainly advisable when predicting the ups and downs of this market. Just over a month ago, an analysis of the same type had risked that the price of meat could remain relatively stable until the end of the year, helping to “slow down the rate of inflation.”
Regarding the latter, the work indicates: “note that the prices in dollars of local finance have remained well above the values of the region (Brazil, Paraguay, Uruguay), which limits the competitiveness of exporters and puts some ceiling to the values for the next weeks”.
In the opposite direction, factors play such as the high “awareness” of economic agents, the high devaluation expectations that remain, the shortage of reserves worsens and the red trade balance continues, which, according to the data already reported by INDEC, it was in deficit in 6 of the first 7 months of the year. In this scenario, the calculation is that as the year progresses, the lack of dollars that the farm usually contributes will be more noticeable (due to the drought) and that they will not appear “no matter how much more soybean dollars or agricultural dollars are implemented” , they explained in the letter.
If prices are maintained during the last week of the month, the consumer price will average around $2,700 per kilo, an increase of 40% nominal and 25% real, discounting inflation.
The value of the farm has been falling in recent days in all categories
2023-09-03 07:09:50
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