High exports bring food inflation – 09/30/2024 – Vaivém

Although still at a low pace, the pressure from agricultural products returns to inflation. After deflation of 0.29% in August, food ends September with an increase for consumers.

In São Paulo, the increase is expected to exceed 0.3%, based on the most recent data from Fipe (Fundação Instituto de Pesquisas Econômicas). Among the 15 main price increases in the month, 10 are for products coming from the countryside.

The rise in prices does not occur due to an increase in domestic demand, but due to an acceleration in exports. The international market, although there is a general downward trend in agricultural products, maintains some prices at high levels, such as coffee.

Animal protein, with record exports, rose again in the domestic market. The most pressured is beef, whose foreign sales are expected to exceed 200 thousand tons in September. The data will be released on Friday (4) by Secex (Secretariat of Foreign Trade).

With strong external demand, a pound of live cattle is being traded at R$274, up 14% in September, according to Cepea (Center for Advanced Studies in Applied Economics). External demand drives domestic prices.

In September, one of the most sought after cuts, the sirloin steak, had a 6% increase until the third four-week period of the month, according to Fipe. Exports also support the prices of chicken and pork.

Coffee is one of the products with the greatest weight in food inflation in September, with a 5% increase in supermarkets, according to Fipe. Prices are unlikely to see relief in the coming months, due to the effects of the weather in Brazil and Vietnam.

The anticipated purchase of coffee by European companies, due to the uncertainties generated by the anti-deforestation law, also puts pressure on prices.

Rice remains at high prices, with a bag worth close to R$120 in Rio Grande do Sul. Relief in the international market could come from India, which removed taxes on foreign sales of white rice.

The pressure on domestic cereal prices, however, continues this off-season, which runs until the beginning of next year. For the next one, the greater product supply in Asia and South American countries must accommodate international prices.

Cereal planting is accelerated in neighboring countries, such as Paraguay, Argentina and Uruguay. In Rio Grande do Sul, it reaches 20%. The production forecast is good in the region, but it will depend on the weather.

Prices for part of the agricultural products received by producers in September are better than those in August. This occurs in a period of lower costs than those recorded last year.

Wheat is the exception during this harvest period in Brazil. National demand for external products grows, but domestic demand remains limited. As a result, the cereal fell 3% in the month.

Soybeans and corn, two of the most internationally traded commodities, have their prices influenced by the financial market and the weather. Investment funds, with the fall in American interest rates, returned to purchasing, which caused the price of Chicago to rise, according to Daniele Siqueira, from AgRural.

The uncertain climate in Brazil during this planting season also served as a trigger for the option to purchase the funds. The soybean and corn harvests are doing well in the United States, although they have occasional problems.

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