The Week at a Glance
- Brazilian prices steady
- Paraguay market unchanged, slaughter low
- Argentina’s Beef exports see strong increase
- Minerva expects Brazil to resume exporting beef in Q1
- Frigorífico resumes slaughter, to generate 550 jobs in VG
- Abicalçados carries out prospective mission in France
- Colombian slaughter, meat production drops in past 3 years
- Costa Rica to export sheep leather to China
- Panama to explore business in China, possible joint slaughterhouse
- Venezuela’s farmers say food shortage to worsen in 2018, note slaughter dip
In Brazil this week, the Real closed at R$3.2610 against the US dollar, a change of 0.7% compared to the previous week’s R$3.2365. Slaughter and tannery production is still low and despite the continued pressure for a price reduction, fresh hides remained stable. The exchange rate change was not favorable for Brazilian leather exports. On the sales side, there is little news. The average daily revenue of Brazilian leather exports in the first four weeks of November was only $6.8 million, down from $ 7.1 million last year.
Zebu hides traded at R$1.85/kg (with hump) and Gaucho hides at R$2.30/kg (without hump).
Again this week, Argentina’s market saw slow domestic sales. Sources say that prices remain unchanged as the market enters December and the pre-holiday period.
In Uruguay, slaughter for November through the 25th was down by 6 percent, while for the year it is still up by 3.5 percent.
|Currency PTAX – USD 1.00 = R$3.2365|
Wet Blue & Crust
Brazil’s market remained stable but it was possible to negotiate with the major suppliers and get a discount. We have heard that in the past few days, some important global customers have offered bids for good contracts, which the Brazilian tanneries did not accept, however they are under negotiation for the next two weeks. The domestic market was unchanged from the previous week. Asian interest has perked up somewhat.
Upholstery for auto and furniture continue to maintain the industry’s level of activity in Brazil. There are good negotiations for low grades and wet blue splits due to the volume available. TR1 is trading in a range of US$0.90 to 1.00 cfr, although as we mentioned, it is possible to negotiate for discounts.
In Paraguay, the market remained steady with recent weeks and prices were stable. Sources say that frigorifico slaughter is still low. TR1 traded at at 1.00/1.05, TR2 at 0.90/0.95 and TR3 at 0.80/0.85.
PRICES IN BRAZIL
PRICES IN ARGENTINA
WEEKLY PRICES PER US$/CFR (except raw material)
|FRESH HIDES US$/Kg||This Week||Last Week|
|WET BLUE WHOLE HIDES FULL SUBSTANCE||This Week||Last Week|
|Grade TR1 23Kgs+||0.90-1.00||0.90-1.00|
|Grade TR2 22Kgs+||0.80-0.90||0.80-0.90|
|Grade TR3 21Kgs+||0.70-0.85||0.70-0.85|
|Grade TR4 19Kgs+||0.60-0.80||0.60-0.80|
|WET BLUE WHOLE HIDES 1.8mm+|
|Grade TR1 47/52ft||0.80||0.80|
|Grade TR2 47/52ft||0.70||0.70|
|Grade TR3 45/50ft||0.60||0.60|
|Grade TR4 45/50ft||0.50||0.50|
|WET BLUE SIDES 24mm+|
|Grade AB 22/26ft||1.05||1.05|
|Grade C 22/26ft||0.95||0.95|
|Grade D 22/26ft||0.85||0.85|
|Grade E 20/26ft||0.75||0.75|
|Grade F 20/26ft||0.60||0.60|
|WET BLUE SPLITS|
|6/9 Kgs (Glove standard)||0.25||0.25|
|CRUST ( UPHOLSTERY ) 0.9/1.1 mm Stucco & Buffed|
|CRUST ( AUTOMOTIVE O&M ) 0.9/1.1 mm|
|CRUST ( AUTOMOTIVE O&M ) 01.1/1.3 mm|
|TR 01 Vacuum Dry||1.40||1.40|
|TR 02 Vacuum Dry||1.30||1.30|
|TR 03 Vacuum Dry||1.20||1.20|
|CRUST SIDES FOR SHOE UPPER BLACK DYED THRU|
|ABC 12/14 mm 14/16 mm||1.35||1.35|
|D 12/14 mm 14/16 mm||1.10||1.10|
|ARGENTINA||This Week||Last Week|
|Raw hides (W/S)|
|Crust for shoe upper, 1.2/1.4 mm, black dyed thru*||ABC||2.15-2.20||2.15-2.20|
|Crust whole hides for upholstery 0.9/1.1 mm**||Auto||1.53-1.68||1.53-1.68|
|Wet blue drop splits, average 9/11 kg, selection TR***||Auto||1.40-1.50||1.40-1.50|
**Usually for full grain selections.
*The selection composition determines the price.
Prices in Uruguay
The price of fresh hides remains at the same level this week at $0.85/kg, however, sources say that it is possible to negotiate wet blue prices lower than the reference.
|Wet Blue 14/16 TR1||US$1.30|
|Wet Blue 14/16 TR2||US$1.20|
|Wetblue 14/16 TR3||US$1.10|
|Crust 10/12 TR1||US$1.45-1.50|
|Crust 10/12 Auto||US$1.65|
|Crust 10/12 Auto (Vacuum Dry)||US$1.80|
We remind readers that all price tables that are intended as a basis to illustrate trends. Our prices quoted do not reflect quality changes present between one and the other source. Hidenet.com recognizes that there is a variety of factors able to determine different prices for similar materials.
Beef exports see strong increase
Exports of Argentine beef in the first ten months of 2017 reached a value of approximately $1,046 million dollars, +23.3% higher than the $848 million dollars obtained between January and October 2016. Export value for the month of October 2017 was significantly higher, (+48.3%), in relation to the turnover for October of 2016.
The volume of Argentine beef exports during the first ten months of 2017 were significantly higher than the the same period of 2016. Exports volumes were up +31.1% and, in the year-on-year comparison, it is observed that export sales in October 2017 were significantly higher than those in October 2016. In a broader context, comparing the average of exports for the months of October during the years 2010 to 2017, the current year represents 71% of the average volume registered throughout the decade previous.
Minerva envisions more opportunities in Arab countries
São Paulo – Despite its relevant sales numbers to Arab countries, Brazil’s Minerva believes the region holds further opportunities. At a November 28 meeting with investors in São Paulo, Minerva CCO Iain Anderson Mars mentioned Lebanon, Algeria, Egypt, Jordan, Qatar, Saudi Arabia, Kuwait, Oman, Libya and the United Arab Emirates as prospective targets. He also referenced non-Arab nations including Chile, Colombia, South Korea, Switzerland and South Africa.
Kuwait and Oman were described as countries where beef consumption is strong and increasing rapidly. In Lebanon, consumption is strong, but doesn’t grow as fast. In Algeria, Egypt, Jordan, Qatar and Saudi Arabia, the volumes purchased are low, but demand is going up. Libya and the UAE are places where demand’s weak and its growth is sluggish.
Figures show that the Middle East was Minerva’s premier export destination in the 12 months through September, having accounted for 24% of the company’s foreign sales revenue. In the preceding 12 months, the rate had been 20%. Asia went from number one to two.
President Fernando Galletti de Queiroz said the amount of livestock being bred in major markets like Russia and China is going down, while supply is booming across South America. Brazil is currently the second biggest beef exporting country in the world – India’s the first – but Queiroz believes it will rise to the top next year. Australia ranks third, but the United States are poised to take its spot in 2018.
Queiroz said Minerva handles 7% to 8% of global beef trade. He told investors about the company’s three-pillar strategy: increasing distribution, the number of places it exports to, and the number of places it manufactures from in South America.
Minerva also plans to increase sales in the Brazilian market after diversifying operations in neighboring Mercosur with the start-up of operations in Argentina and capacity expansion in Paraguay and Uruguay. With the uptick in the country’s economy, in October the meat sales already registered a significant increase, said Queiroz.
Minerva Operations Manager Luis Ricardo Luz noted that the goal is to expand by nearly 30% the number of regular customers who purchase the company’s products, to around 45,000 next year. Today 35,000 customers buy meats from Minerva in every month of the year.
Minerva expects Brazil to resume exporting beef to in Q1
According to Minerva President Fernando Galletti de Queiroz, Brazil will resume exporting fresh beef to the United States in the first quarter of 2018.
The US suspended Brazilian beef exports in June after an excessive number of shipments failed USDA inspections. Queiroz said his expectations comes from discussions with the Agriculture Ministry.
Last week Russia also instituted a ban on Brazilian beef and pork, leading Minerva to supply Russia from plants outside Brazil. IN 2017, Minerva bought Mercosur-based beef plants from JBS in a $300 million deal, expanding its reach in the region outside of Brazil. The CEO did not say when the three slaughterhouses it bought from JBS in Argentina would reopen, according to a report from Reuters.
Frigorífico resumes slaughter, to generate 550 jobs in VG
Frigorífico Pantanal in Várzea Grande reopened Friday December 1st, after being closed for 7 years.
With a slaughter capacity of 750 head per day, the unit will reopen with the hiring of 550 initial employees, which can be expanded. According to owner Luiz Antônio Freitas, the unit will start operating below capacity and will increase progressively until it reaching the maximum. The expectation is to generate more jobs and start exporting. “We will start working to acquire the export licenses,” he says.
The unit has been undergoing preparations for more than a year and will initially generate 550 direct jobs, with the possibility of expanding to up to 800 jobs.Freitas explains that the goal is to export to all markets and that employees have been trained to carry out halal slaughtering. “We react with a modern industry and elaborate products. We hope to bring a lot of pride to Várzea Grande and Mato Grosso, “said Freitas during the launch of the plant.
Brazilian cattle market update
Prices are firm. Difficulty in buying cattle and lengthening the slaughtering schedule are the causes for the purchase offers above the reference. In São Paulo, on Tuesday (28), the arroyo of the bullock increased 4% since the beginning of the month. In the state, purchase offers between R$1.00 and R$2.00 per arroba above the reference are common. Rio Grande do Sul has a similar scenario. Since the beginning of the month, the price has risen by 8.1%. Beef consumption is expected to rise next week.
Brazilian beef exports are expected to grow by 5% in volume by 2018. Rabobank senior analyst Adolfo Fontes told Grupo Estado on the sidelines of the 2017 Agribusiness Summit on Monday that the Russian embargo on Brazilian meat must be resolved in 60 days. If this does not happen, projections will need to be revised. In addition, he assumes that shipments of fresh beef to the United States will also resume in early 2018. “This is the key for Brazil to pursue other markets such as Mexico, Canada and Japan,” Fontes said. Countries that do not yet buy from Brazil account for 40% of the global beef market. Under the same conditions, he projects that exports of pork and poultry will advance about 3% next year. “China’s purchases are expected to grow again after adjustments have been made in 2017,” he said. Purchases from South Korea, from Santa Catarina, should support shipments as well. “Now if Russia does not resume buying Brazilian meat until February, we will have a lot of internal price pressure,” he said. Russia consumes 10% of Brazilian production. This scenario should increase the offer of fresh hides in the Brazilian market.
Brazil negotiates port use in Spain to expand exports to Africa and Europe
The Ministry of Agriculture, Livestock and Supply (MAP), in partnership with the Ministry of Foreign Affairs, held a meeting between logistic operators and Brazilian agribusiness sector entities with the Board of Directors of the Port of Las Palmas, in the Canary Islands, Spain. They were presented opportunities through the use of the Spanish warehouse in the re-export of Brazilian commodities to Africa and Europe.
The negotiation for use of the Spanish port resulted from the official mission by MAP Executive Secretary Eumar Novacki to Spain in October 2017 on the occasion of the visit to the Fruit fair. Novacki’s official agenda included a meeting with the Las Palmas port board, which operates shipping lines for more than 30 African countries and is prepared to berth large vessels. It is also capable of storing grains, fruits, meats and machines and redistributing them to different African destinations on smaller vessels.
Evaldo da Silva Júnior, director of the Department of International Promotion of Agribusiness, said that “the existence of alternative trade routes that are already traditionally used by exporters of Brazilian agricultural products is healthy for the country.
JBS Couros presents new version of Authentic collection during US Showtime market
JBS Couros, world leader in leather processing, is at the Showtime Market, which is being held from December 3 to 6 in High Point, North Carolina, USA. It will be presenting the latest edition of its global Authentic – Deep Into Nature collection for the furniture industry, with leathers produced in Italy, South America and Asia.
This latest version of Authentic keeps the original inspiration from nature’s four elements (water, air, earth and fire), emphasizing the leather’s natural beauty and authenticity. “In this new edition, we are working with colors that are focused on the US market, based on a survey among people directly involved in the industry to find out what the region really wants,” said Max Lapegna, commercial manager at JBS Couros.
Among its differentials, the new collection offers lighter finishes that give the leather sophistication and flexibility, alongside better leather usage, adding value to the end product. “We have around 60 years’ experience developing and producing finished leathers, which means we are able to apply exclusive designs that bring together the high quality of our raw materials with industry trends, in addition to which we have a distribution platform serving not only the US but all the world’s main manufacturing centers”, said Lapegna.
Unlike some of the other raw materials used by the furniture industry, which have risen in cost, leather prices have remained stable. “This means we have been able to develop some competitive articles that offer high added value and are a significant alternative that can maximize our customers’ results”, explains Lapegna.
Based on this, JBS Couros is investing in research and development to stay ahead of the curve and develop a continuous pipeline of new ideas. “We believe in the essence of leather and want to offer consumers a sustainable as well as unique, natural and atemporal style, supplying a raw material from a guaranteed source that adds value to our customers’ products”, comments Lapegna.
JBS Couros produces leather in the wet blue, crust and finished product stages for the automotive, furniture and footwear and leather goods sectors. Its global business structure makes JBS as an obvious choice for companies that need high production capacity, quality and guaranteed delivery, allied with innovation, to meet an increasingly demanding market.
JBS Couros has been investing in the US furniture sector, currently the world’s leading market for leather furniture, for 4 years. The business unit has a 3,500 ft² showroom in High Point, North Carolina, which is a permanent venue showcasing new products and collections. “We also have a distribution center in Hickory – NC, capable of warehousing 25,000 hides and ready to meet our customers’ specific needs,” concluded Lapegna. The company also owns its own tanning unit in Cactus, Texas, from where it ships high quality US leathers to its finishing units in Europe, Asia and South America.
Abicalçados carries out prospective mission in France
With a consumption of more than 400 million pairs of footwear per year – more than 6 pairs per capita and virtually all imported volume, especially from Italy – France has caught the attention of Brazilian footwear. In order to better understand the market, the retail structure and the commercial promotion model more appropriate for Brazilian footwear, the Brazilian Association of Footwear Industries (Abicalçados), through the Brazilian footwear footwear export support program, is carrying out a prospective mission to the country November 25 to December 3. Brazilian Footwear is developed in partnership with the Brazilian Agency for the Promotion of Exports and Investments (Apex-Brasil).
Roberta Ramos, project manager at Abicalçados, says that meetings with local retail networks, distributors, public relations agencies and hotels are scheduled for the possible realization of showrooms. “In addition, a detailed study on the French market is in progress and should be delivered by the end of this year,” she said.
Currently France is the third main destination of Brazilian footwear abroad, but purchases, basically, slippers, that is, are products with lower added value. “The objective is to better understand the behavior of the French consumer through study and the mission, to export footwear with higher added value, increasing the average price and taking advantage of the potential of that market more effectively,” Ramos said.
Last year France imported 9 million pairs of Brazilian footwear, which generated $56 million, up 5.3% in volume and 2% in revenue compared to 2015. In the first ten months of 2017, French companies have already imported 4.5 million pieces for US $45 million, down 30.3% in volume and up 4.7% in revenue compared to the same period last year. “This disparity is due to the fact that France is gradually importing Brazilian shoes with higher added value. This year the average price of the product exported there increased from US$6.00 to US$10.00,”explains Ramos.
Abicalçados presents results of exploratory mission to China
The Brazilian Footwear Industries Association (Abicalçados), through Brazilian Footwear, a shoe export support program maintained in partnership with the Brazilian Agency for the Promotion of Exports and Investments (Apex-Brasil), presented, on the 30 November, the results of its September exploratory mission to China.
Letícia Sperb Masselli, coordinator of Commercial Promotion at Abicalçados, explains that the mission, which toured the cities of Shanghai, Hangzhou and Chongqing, allowed for a mapping of local retail. What most attracted attention, however, was e-commerce, which has more than 700 million active buyers. “China consumes 25% of the world’s footwear production, and much of this consumption has come via digital channels, especially through so-called cross border e-commerce,” says Masselli, adding that by 2018 the country must surpass the United States and become the most “digitized” economy in the world.
On the other hand, the Chinese market requires high investments, so this presentation in the main Brazilian footwear hubs that are in search of brand engagement was very important. “As a very large market, investments for image and commercial promotion are high,” she says, adding that in 2018, the goal is to build, along with partner brands and Brazilian Footwear, the most assertive strategy of insertion, which unites the online mode with offline. This is important since the Chinese consumer still highly values the physical store as a point of experience. “It’s a difficult market, but it will certainly be worth the effort,” she says.
With 1.4 billion people, China is the largest consumer footwear market in the world, having consumed almost 4 billion pairs last year. Since 2010, Abicalçados, through Brazilian Footwear, has participated in missions and local fairs, along with Brazilian footwear brands. Since that year, shoe exports there have increased more than 400%, jumping from $1.4 million to $6 million last year.
Colombian slaughter, meat production drops in past 3 years
“In 2015, between January and September, Colombia produced 619,000 tons of carcass meat, and this year it has only reached 539,000 tons,” said Fedegán president José Felix Lafaurie.
A comparison of the slaughter figures reported by DANE between the periods of January to September 2015 and 2017, shows a decrease in the supply of meat, while appreciating the enormous effort of the farmers reflected in the increase of efficiency.
The comparison of the figures of bovine slaughter in the last 3 years shows a bittersweet panorama.
On the one hand, the sector offers less meat to Colombian consumers, which is a logical consequence herd decline, the lack of public policies to boost the sector, and illegal slaughter, among others. On the other hand, efficiency indicators show positive signs.
During January-September 2015, 2,953,463 head were slaughtered, but this year, slaughter decreased to 2,517,674 animals. That means slaughter dropped by about 436,000 head, which, in percentage terms, represents a fall of 17.3%.
The contraction of the sector is of such magnitude that, between these two periods, this economic activity lost about 939 billion pesos.
The impact for domestic consumption is greater due to the exports of live cattle, which went from 43,785 head to 81,396, recording an increase of 37,576 animals, that is to say 46.2 % more. Despite this, the figure for 2017 is lower than that registered in 2016 by 11,139 heads, which can be explained by the foot-and-mouth disease problems registered in the previous months of this year.
Today, cattlemen are slaughtering heavier animals. The average slaughter weight in males went from 448.9 kilograms in 2015 to 458.5 kilograms in 2017. This is a significant increase of 9.6 kilograms per animal, which represents a weight gain of 2.1%.
For females, the weight increased in greater proportion. In 2015, the average slaughter weight was 371.2 kilograms and this year it was recorded for the same period compared (January-September) of 382.6 kilograms. This represents an increase of 12.5 Kilos, equivalent to 3.2%
The shortcomings in the sector caused by the destruction of tertiary roads, especially in winter, are evident in the increase in insecurity recorded by the alarming growth of cattle rustling and carnage, and of course in the unfair competition represented by the excessive smuggling, and the the absence of public policies that have completely forgotten the issue of bovine repopulation or of improving credit conditions for the agricultural sector in general.
Export of sheep leather to China approved
The union of sheep producers confirmed that the Chinese government has already approved the protocol and the respective certification for imports of sheep leather from Costa Rica.
From a statement issued by the Costa Rican Sheep Association:
San José, Costa Rica, November 30, 2017. The governments of China and Costa Rica have reached an agreement so that producers of Costa Rican sheep can export leather of these animals to the Asian nation.
During the National Congress of Sheep Producers of Costa Rica 2017, which took place at the Balsa Athens Headquarters of the National Technical University (UTN-Athens), the Director of the National Animal Health Service (SENASA), Bernardo Jaén confirmed that a government delegation from the People’s Republic of China visited Costa Rica two weeks ago to finalise the respective negotiations.
Panama to explore business in China, possible joint slaughterhouse
In January 2018, a delegation of businessmen from the livestock sector will be visiting the Asian country to develop new commercial alliances to increase exports of bovine meat.
Panamaamerica.com.pa reports that “…According to the president of the National Association of Cattle Ranchers (Anagan), Aquiles Acevedo, the aim of the visit is to look for new alternatives for exporting bovine meat. Acevedo explained that the Anagan will invest in livestock and raw materials, while the Chinese will provide the marketing, which is another way to export meat.”
The aim of livestock producers, who will visit China along with authorities from the Ministry of Agricultural Development (MIDA), is to create an alliance in which they invest in raw materials and livestock, and counterparts in China will develop the market. Acevedo indicated that “… one of those alternatives is the construction of a slaughterhouse under a ‘Joint Venture’ scheme.”
“… From January to August, beef exports amounted to $12 million, according to figures from the Anagan.”
Farmers say food shortage to worsen in 2018, note slaughter dip
The shortage of food in Venezuela will worsen further in 2018 due to lack of supplies, warned the agricultural union on Tuesday, which believes that only international aid would prevent a collapse.
“The scenario for 2018 is critical: If 2017 was difficult, having inventories left over from 2016 in fertilizers, seeds and agrochemicals, by 2018 we have nothing,” said Aquiles Hopkins, president of the National Federation of Farmers (Fedeagro).
In a speech before the parliament, with an opposition majority, he assured that “there is not a single bag of fertilizer in the country,” while the head of cattle fell from 11 million for the third time in history.
The bovine flock had only fallen to those levels “in the War of Independence and the Federal War,” in the 19th century, the leader illustrated. According to Hopkins, today the agroindustrial sector barely supplies 30% of national consumption, after contributing 70% in the past.
He cited examples such as white corn, which only covered 25% of consumption in 2017, sugar (21%) and coffee (30%), support of the Venezuelan economy before the oil era.
“There is no way to recover production if there is no international aid,” said the executive, who asked the parliament, which has an opposition majority, to support Fedeagro’s efforts so that other countries can provide technological cooperation.
Hopkins said that such assistance implies indebtedness, which requires the support of the Legislative and the government, which he blamed for not providing enough foreign currency for the importation of raw materials.
In Venezuela, the State monopolizes dollars through strict control of exchange and also the distribution of inputs for agriculture.
The socialist government faces serious liquidity problems due to the drop in the price of crude oil – which contributes 96% of foreign exchange – and the bulky service of the external debt, which led to a drastic cut in imports.
The shortage of food has reached peaks of 80% in recent years, according to the Datanálisis firm.
Hopkins complained that the delivery of inputs privilege state enterprises, including one administered by the military, with a strong presence in the government.
“We would like to see our Navy out guarding the borders, fighting extortion, kidnapping, cattle rustling and thefts of farms, and not trying to do what it does not know how to do,” he said.