Brazilian Cattle Price Surges to Record as Heat Chars Pastures

Brazilian cattle is trading at the highest level ever as heat scorches dry grazing fields in the top beef-exporting country, threatening livestock supplies for meatpackers such as JBS SA and Minerva SA.

Benchmark cattle prices in Sao Paulo rose to a record 115.07 reais ($48) an arroba (32 pounds) yesterday, up 17 percent from a year ago, according to data on the website of the University of Sao Paulo’s Cepea agricultural research agency.

Brazil, where most cattle is grass-fed, had the hottest January on record and the least rain in two decades in agricultural-producing areas of the southeast and west, Marco Antonio dos Santos, an analyst at weather forecaster Somar Meteorologia in Sao Paulo, said by phone. The heat wave and drought that are pushing up prices of everything from coffee to hydropower is also preventing calves from fattening for slaughter, Cepea’s Sergio De Zen said from Piracicaba, Brazil.

“Most cattle in Brazil is pasture-fed and depends on summer rains that didn’t come,” Zen, a researcher at Cepea and professor at the university, said of the Southern Hemisphere summer that runs from early December through February. “The situation is worrying because beef is an important driver for food inflation.”

The drought and heat are charring pastures in the states of Mato Grosso do Sul, Goias, Sao Paulo and Minas Gerais, which supply about half the cattle bought by meatpackers in Brazil, Zen said.

Abiec, the beef-industry association representing JBS and Minerva, is “still compiling January slaughtering data to evaluate if the drought had any impact on beef production,” Antonio Camardelli, head of the group, said by phone from Sao Paulo.

Before it's here, it's on the Bloomberg Terminal.