South American Real Estate News

Brazil´s JBS leads the way on feedlot livestock

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JBS SA led the way in 2010 in total cattle in feedlots with 168,772 animals, according to the survey. The company moved up from third in BeefPoint’s cattle confinement rankings from 2009.

BRF Brasil Foods, which ranked ninth in cattle confinement among the top 50 sector businesses in 2009, moved up to sixth in 2010. Marfrig did not participate in the survey.

The rising cost of grain prices in 2010 deterred many industrial cattle farms from focusing more animals in confinement situations. But BeefPoint said that in 2011, higher prices for the end product will help convince industrial farmers to confine more cattle.

BeefPoint’s survey showed that 28 percent of Brazil’s cattle feedlots are in Goias state, 26 percent in Sao Paulo, 22 percent in Mato Grosso, 14 percent in Mato Grosso do Sul, 8 percent in Minas Gerais and 2 percent in Parana. Within those feedlots, 37 percent of the cattle are confined in Goais state, 26 percent in Sao Paulo, 18 percent in Mato Grosso, 12 percent in Mato Grosso do Sul, 6 percent in Minas Gerais and 1 percent in Parana.

The survey showed for feedlot managers that the peak time of year for slaughter and sale of cattle in 2010 was in October. BeefPoint forecasts that October should again be the focal month this year, but by confining more cattle producers hope to move more of their sales volume into September, escaping the peak of supply when their sales price can be knocked down.

The number of cattle turned off from Brazil’s 50 largest feedlots in 2011 is forecast to grow 33% year-on-year, to 1.6 million head (Agripoint).

The Brazilian feedlot industry is characterised by a relatively short feeding regime, typically less than 100 days, utilising sub-products from the cropping industry (such as sugar cane and corn silage) in addition to some grains such as cotton seed. Production is largely oriented to increase supplies during spring, when supplies tighten and prices rise.

Feedlot turnoff (marketing) dropped 9% in 2010, to 1.2 million head, mainly as a result of rising input prices (light steers and feed costs) early in the year and price uncertainty between September and November.

Despite input prices continuing to be high in 2011, and cattle prices expected to increase (but remain below 2010’s records), Brazilian feedlot operators are more optimistic about margins in 2011. Additionally, feedlot operators are reportedly utilising risk management tools, such as option and futures contracts.

Agripoint’s research also shows that companies such as JBS and Brasil Foods are increasing their participation in this segment, largely to ensure production during the lower supply periods of the year.

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Post available in: English


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