According to private surveys, this trend has continued so far in December. According to the consultancy LCG, in the third week of December, prior to Christmas, meat accumulated a rise in the last four weeks of 0.9%, while the general average of the increase in the basket reported by the firm was 3.2%.
The smaller increase in beef contained, somewhat, the inflation of last month. It is that, as they remarked from Ecolatina, “its weight is almost 5% in the IPC and represents 15% within Food and beverages, Therefore, the impact of price variations on family spending is not minor”.
In this scenario, in the last semester there was a marked reduction in the value of meat, contrary to what happened in 2020 and 2021. “According to the survey of the Institute for the Promotion of Argentine Beef (IPCVA), In November, the average retail price of beef in the AMBA fell again in real terms for the sixth consecutive month, resulting in 25% cheaper than in May and 20% cheaper than a year ago.”, they analyzed from Ecolatina.
There are, broadly speaking, two factors that explain this scenario. On the one hand, it is due to a drop in demand. “There are two reasons that make meat stay at the values it is. The first of these is the loss of purchasing power of wages, as a result of the enormous monetary issue,” explained Miguel Schiariti, president of the Meat Industry and Commerce Chamber (CICCRA), to Ámbito.
“Secondly, The drought is causing the producers to not be able to keep the animals in the fields and so, despite the fact that they lose money, they quickly finish them off in a corral and send them to the market. This generates, for the demand that exists today, a very bulky supply, which prevents prices from adjusting to real values.”, Schiariti remarked.
alarms in the future
For these factors, which stand out from the sector, is that a greater increase in the price of meat was not observed (at least so far) in December, as is usually the case in other years, due to seasonal issues and a greater demand for Parties.
However, alarms could go off in the near future. “The current increased supply presents medium-term risks, with a potential impact on prices”, highlighted from Ecolatina, and added: “The advancement of both the departure of animals from the fields and the harvest, added to the fact that in drought scenarios the pregnancy and weaning rate falls, would cause a lower supply in the future, which At the same time, it would arrive with fewer kilos achieved as a result of the loss of profitability of the feedlots. The lack of rain also hinders the possibility of breedingbefore a higher percentage of empty cows that, due to their physical condition, not only do not enter the reproductive cycle, but also cannot raise calves”.
In this scenario, a drop in the level of slaughter is expected for next year of around 9% compared to 2022. “Even with a change of climatic phase, the offer could also fall. If this happens, as revealed by the main climate models, and as of February we begin to transition from a phase of neutrality towards a more rainy autumn-winter, we could expect a greater retention of cattle in the fields, since the scenario for production would improve. on a pastoral basis. Thus, these longer fattening cycles would lead to a temporary supply slump that would be felt especially during the first half of the year,” they concluded from Ecolatina.
Consequently, this lower supply could translate into an increase in the price paid by the consumer.. A correction that, in order to recover what was lost in the last six months, should be a little more than 30%. In any case, the figure will also depend on how the demandwhich continues to contract month by month compared to previous years.
Source: Ambito
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