Suspicion of mad cow in Brazil halts the cattle market – 02/22/2023 – Market

The suspicion of a case of the disease “mad cow disease” in Pará, which is being investigated by health authorities, stopped the cattle market and left slaughterhouses in Brazil on hold this Wednesday (22), with suspended slaughter in several regions of the country awaiting a result.

The possible positive result for the disease, even in the “atypical” form – when the disease is spontaneous in older animals -, may temporarily prevent beef exports to China, the main market, according to experts interviewed by Reuters.

According to them, arroba prices are still stable on the physical market, with a downward trend if the disease is confirmed, but future prices have already dropped by almost 3% on B3.

The Ministry of Agriculture said in a statement on Monday that it was investigating a suspected case of Bovine Spongiform Encephalopathy (BSE), known as “mad cow disease”.

In these situations, final confirmation is done by the International Organization for Animal Health (OIE) laboratory in Canada. According to the ministry, there is still no forecast for the return of the analyzes.

“There is a protocol between Brazil and China that makes Brazil apply a self-embargo for beef to the Chinese if the atypical mad cow is confirmed, which appears spontaneously in older animals, and is what is being investigated”, said the head of Agro, Food and Beverage at XP, Leonardo Alencar.

“So, the industry is on hold. While the case in Pará is not confirmed, it will not mainly buy the ‘China ox’ because it runs the risk of a stoppage in exports,” he added.

There was no information on which refrigerating units had stopped operations, in a market operated by giants such as JBS, Marfrig and Minerva. The companies did not immediately comment.

The ‘China bull’ is an animal aged less than 30 months at the time of slaughter and with a maximum of four permanent incisor teeth, a sanitary specification of the Chinese who buy meat only from this type of cattle, whose price has a premium in relation to the conventional value of the arroba.

Along the same lines, the director of Scot Consultoria, Alcides Torres, said that the scheduled slaughters are not being carried out at the slaughterhouses.

“Slaughters across the country have been suspended since the disease was suspected. The herds that were scheduled were out of schedule. They are not slaughtering cattle until the result is announced,” he said.

The analyst at Safras & Market Fernando Iglesias also said that, this Wednesday, “most meatpacking industries did not even disclose prices for the arroba, others simply suspended slaughter throughout Brazil”.

He pointed out that live cattle contracts on the futures market, quoted on B3, had an aggressive drop pricing the problem.

S&P Global analyst Aedson Pereira said that, even without confirmation of the case, the suspicion already generates discomfort for the chain as a whole.

“This worries not only the cattle rancher, but it generates a concern of the industry itself due to the possibility of not being able to give way to meat production, and the domestic market is dragging on”, he said.

Specifically in Pará, where the suspicion was found, Pereira believes that the impact would be even more negative, since the state’s livestock squares currently have the lowest arroba prices in the country, and significant differences in relation to the quotation reference of São Paul.

Data from S&P show that in Redenção (PA) the fat cattle is quoted at R$ 226 per arroba in the spot market and R$ 228 in installments, against R$ 296 in installments in São Paulo.