Page 38 - Minerva Foods | Annual Report 2017

Industry
OVERVIEW
The year 2017 was notable for the intense vol- atility in beef demand in Brazil. The first half was characterized by a drop-in consumption, due to factors such as an investigation by the Federal Police, which found irregularities at meatpacking plants (an occurrence which did not involve Minerva), an environment of po- litical instability and weak economic perfor- mance. However, signs of recovery in the na- tional economy during the second half caused an upswing in the market, with the sector end- ing the year with a slaughter volume of 26.4 million head of cattle, up by 9% when com- pared to the previous year.
There was a recovery in exports during the period, especially in the second semester. To- tal volume shipped reached 1.2 million tons, which is 12% higher than in 2016 and resulted in revenue of US$5.1 billion, 17% more than the previous year. This result is the outcome of the continued growing demand in Asian countries, especially in China and Hong Kong, as well as in the Middle East and Northern Africa, par- ticularly in Egypt, Iran and Israel; instability in beef export volumes from Australia; and paltry export growth in the USA, up by 1% in relation to the volume exported in 2016.
Domestic Market
The troubled scenario in the industry during the first semester and the higher availability of animals ready for slaughter during the year, especially at the start of the second semester, dropped the average price per arroba (15 kg) to R$138.80 in 2017, falling 9% compared to the previous year, according to Boi Gordo Esalq/B3 – São Paulo State. However, in the last quarter, indicators have pointed towards a recovery, with the average price of an arroba at R$142.30, or 5% less than in the fourth quarter of 2016. Domestic market consumption trends for 2018 remain positive. In addition, a drop is expect- ed in unemployment, lowering household debt which could favor the beef market.
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