Brazil's Beef Exports Down by USD 2.34 Billion in First Three Quarters of 2023

Published Oct 10, 2023

As of Jan-23 to Sep-23, Brazil’s beef export value is down by 26% or USD 2.34 billion compared to last year. Most of the decline resulted from a lower export price, but a lower volume has also contributed, underlining a weaker Chinese demand. Nonetheless, September’s 2023 figures, in particular, were better than expected, with considerable volume increases from China and a slight price recovery.

According to the most recent data from the Brazil Ministry of Industry, Foreign Trade, and Services, Brazil's beef exports from Jan-23 to Sept-23 totaled 1.42 million metric tons (mmt), amounting to a total value of USD 6.8 billion. In terms of volume, this represents a 5% decrease or 77 thousand metric tons (mt) compared to the previous year. In contrast, the decline in value was more pronounced, at 26%, equivalent to USD 2.34 billion. The average export price during this period was USD 4.80 per kilogram (kg), marking a 22% year-on-year (YoY) decline. Consequently, the primary reason for the losses in 2023 can be attributed to the significantly lower export prices, with reduced volume also playing a role.

Brazil’s largest export destination, China, suffered the most substantial declines in both volume and prices. Between Jan-23 and Sept-23, Brazil exported 851 thousand mt of beef to China, a 7% YoY drop equivalent to 65 thousand mt compared to the same period in 2022. This represented the most significant YoY loss in export volume to any country. Simultaneously, the average export price to China plummeted by 28% YoY to USD 4.89/kg, constituting the most significant percentage drop among the top ten export destinations.

It's worth highlighting that a significant portion of this decline can be attributed to lower export volumes between February and April due to a temporary suspension of beef exports to China and other crucial markets prompted by an isolated and atypical case of mad cow disease. Nevertheless, as anticipated, Brazilian beef exports rebounded in May and June, setting records for export volume during those months. However, an unexpected YoY decline in export volume occurred from July through September, primarily driven by China. This Q3 decline suggests a softening demand in the Asian country.

As previously reported, the factors behind China's weakened demand include a weak Chinese Yuan in conjunction with a strong Brazilian real, an increase in domestic beef production reducing the need for imports, and China's lower prices discouraging Brazilian exports to that specific destination.

The combined effect of a weaker yuan (-4% YoY in Sep-23) and stronger real (+6% YoY in Sep-23) against the US dollar resulted in China’s yuan losing 9% of its value in terms of Brazilian real.

In addition, countries offering higher prices are gaining some of China’s share. For example, exports to Chile, which is paying a higher average price than China and only recorded a 3% YoY decline in its Jan-Sep 2023 prices, are increasing.

In the meantime, China’s beef production is increasing, predicted to rise by 4% YoY this 2023 by the United States Department of Agriculture (USDA), reducing the need for imports.

Beside China’s, losses in other countries, including Egypt, Indonesia, and Israel, managed to more-than-offset gains in other countries, such as Chile, Russia, and Saudi Arabia.

Source: Brazil’s Ministry of Industry, Foreign Trade, and Services; Tridge

September’s Export Figures Were Better than Expected

In Sept-23, Brazil exported 195 thousand mt of beef in natura (beef excluding derived products), with a total worth of USD 885 million. This volume represents an increase of 5.3% or 9.8 thousand mt month-on-month (MoM), which was better than seasonality-derived expectations. A considerable increase in China – up 17 thousand mt – made up for the export losses to Chile and Egypt. Russia, Hong Kong, and the United States (US) also contributed to the monthly gains. Imports in China got a boost with expectations of increased consumption during the Chinese Golden Week holidays in October.

Meanwhile, the average export price for all countries in September was USD 4.54/kg, up by a slight 0.6% from Aug-23's 31-month low. The average export price to China increased by 2% MoM, slightly better than the total average. Notably, the export price to the US climbed by 9% MoM, underlining solid demand from the US, which has been suffering domestic production losses, as Tridge has previously reported.

Still, while better than expected, the monthly gain wasn’t enough to produce a significant increase compared to last year. In YoY terms, volume fell by 4% or 7.9 thousand mt and value declined by 27% or USD 333 million.

Short-term price outlook. As expected, export prices floored in August as levels were already below the five-year average. The historical trend suggests further downside ahead, but prices aren’t expected to fall significantly below this barrier. On the other hand, while September’s figures were better, fundamentals point to a limited upside derived from ongoing global production growth. Increasing energy prices pressuring producer costs might paint a more bullish panorama for the year’s end.