Finished-cattle prices in São Paulo, Brazil’s benchmark market, have jumped 7.3% since July 13, defying expectations that the exhaustion of the quota for Brazilian beef exports to China would trigger a sharper selloff.
Prices are now near $68.56 (349 reais) per arroba, a 15-kilogram carcass-weight unit, as tight cattle availability outweighs the expected loss of Chinese demand.
October futures on B3, the Brazilian stock exchange, trade at $69.61 (354.35 reais) per arroba, suggesting investors expect the supply squeeze to persist. The market is divided over whether the shortage is seasonal —and will ease when feedlot cattle arrive— or an evidence of a more persistent deficit.
“It is surprising that cattle stopped falling,” said César de Castro Alves, a manager in Itaú BBA’s agribusiness consulting unit.
Lygia Pimentel, founder of consultancy Agrifatto, also said the market had proved firmer than expected.
Seasonal Squeeze
Castro Alves believes the current supply shortage is seasonal and should soon be reversed. Under that scenario, cattle prices would resume their decline as additional animals reach the market and Chinese demand weakens.
Feedlot operators had several opportunities during the year to hedge cattle prices through futures and options, securing margins of more than $98.22 (500 reais) per head, according to Castro Alves.
Those returns should encourage a significant volume of feedlot cattle to reach slaughterhouses, putting downward pressure on both cattle and beef prices, he said.
Maurício Nogueira, founder of consultancy Athenagro, shares that view.
“The futures market is pricing in a chronic supply shortage, which I don’t believe,” Nogueira said.
Profitability indicators suggest feedlot margins remain attractive. Such margins typically correlate with the number of animals finished in intensive systems, including operations that use grain in cattle diets.
Athenagro projects a 2026 feedlot-finishing profit of $6.68 (33.99 reais) per arroba, the best result in at least seven years. For full-cycle ranchers that breed, raise and finish their own cattle, the estimated return rises to $16.64 (84.73 reais) per arroba.
Nogueira expects cattle from conventional feedlots and intensive pasture-finishing systems to enter the market eventually. The latter, known in Brazil by the acronym TIP, is a semi-feedlot model that keeps cattle on pasture while providing a heavier feed ration.
Some data already point to an acceleration in feedlot activity.
A July 24 survey by Cepea, an applied-economics research center at the University of São Paulo, and animal-nutrition company Tortuga showed that the contraction in feedlot activity from a year earlier had narrowed to 10.2%. The decline had reached 21.4% in May.
Should that trend continue, cattle supplies could increase.
Feedlots May Stay Empty
Not everyone expects a large wave of feedlot cattle.
Michel Torteli, founder of FinPec, a platform that raises investor capital for cattle operations, sees the opposite scenario: feedlots with fewer animals than usual.
“The futures curve inverted in March, so operators placed fewer cattle in feedlots because they were afraid,” Torteli said. FinPec observed similar behavior among its partner feedlots.
Cargill’s most recent feedlot-monitoring report supports that assessment.
Occupancy at the feedlots tracked by Cargill stood at 75.54% in June, more than 14 percentage points below the 89.62% recorded in the same month of 2025.
Torteli also believes ranchers and meatpackers brought forward a significant number of cattle slaughterings during the first half, reducing the supply available for the rest of the year.
“Cattle for the domestic market have dried up,” he said.
IBGE, Brazil’s national statistics agency, recorded a 3.3% increase in cattle slaughter during the first quarter. The expansion was led by slaughterhouses operating under municipal and state inspection.
Should FinPec’s assessment prove correct, the scope for another sharp decline in cattle prices would be limited.
“If there really is a shortage of cattle, prices will not fall again and could rise sharply,” said a person familiar with the cattle market.
The next few months will show which view is right.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
