Brazil's Beef Exports Resume MoM and YoY Decline in October

Published 2023년 11월 10일

As of Jan-23 to Oct-23, Brazil’s beef exports are down by 5% in volume and by 25% in value, the latter representing a whopping USD 2.59 billion. China continues to drive the decline, but the US is gaining market share. In year-to-date terms, exports to Chile are booming.

Brazilian in natura beef exports declined further in October, as expected. According to the most recent data from the Brazil Ministry of Industry, Foreign Trade, and Services, Brazil exported 186.17 thousand metric tons (mt) of beef in natura (that is, excluding derived products) in Oct-23, with a total worth of USD 855.76 million. In month-over-month (MoM) terms, the decline in volume was 4.5%, and the reduction in value was 3.3%. The negative direction of the MoM change for both volume and value was as expected, but the magnitude of the decline was slightly higher than the typical seasonal decline.

Meanwhile, in year-on-year (YoY) terms, quantity exported declined by 1.2% (net 2.2 thousand mt), while value dropped by 22% (USD 246 million). It's worth noting that the decline in volume and value occurred at the slowest pace in four months. As seen in its sharper decline relative to volume, most of the value decline has been brought by a fall in the average export price, which stood in October at USD 4.60 per kilogram (kg), down by 21% YoY.

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

China continues to lead the decline. In October, exports to China, Brazil’s largest export destination for beef, totaled 117 thousand mt with a total worth of USD 547 million, representing a decline of 8% YoY (10.8 thousand mt) in volume and 31% YoY (USD 240 million) in value. China’s share of Brazil’s exports in volume in Oct-23 was 63%, compared to 68% of the total in Oct-22, while in value, it was 64% compared to a previous 72%.

Brazil is offsetting some of the losses experienced in the Chinese market by augmenting its exports elsewhere. In October, in particular, exports to the United States (US) totaled 7.7 thousand mt worth USD 35 million. These figures represent YoY gains of 33% in volume (1.96 thousand mt) and 29% in value (USD 7.99 million). For Oct-23, the US’s share in volume grew by 1.0 percentage point to 4.1% in Oct-23, while in terms of value, it grew by 1.7 percentage points to 4.2%. Exports to the US are booming despite having already fulfilled the zero tariff quota, as the North American country’s production continues to decline, being insufficient to fulfill its strong domestic demand.

Other major YoY gainers in October include UAE (+3.7 thousand mt), Egypt (+2.6 thousand mt), Libya (+1.7 thousand mt), and Turkey (+1.8 thousand mt).

Year-to-date 2023, exports are down by 5% YoY. From Jan-23 to Oct-23, Brazil exported a total of 1.61 million metric tons (mmt) of beef with a total worth of USD 7.68 billion. The volume exported is down by 4.8% YoY, while the value fell by 25% (a loss of USD 2.59 billion). So far into 2023, the average export price so far stands at USD 4.77/kg, down 21% from the same period a year ago. Exports to China, which were temporarily halted between Feb-23 and Apr-23 due to an atypical mad cow disease case, are leading the bulk of the decline. However, booming exports to other destinations such as Chile, Russia, and Libya are recovering some ground.

Exports are expected to resume YoY growth in 2024. The United States Department of Agriculture (USDA) is forecasting Brazilian beef exports to decline by 5.1% in 2023, in line with the trend from Jan-23 to Oct-23. However, the American agency expects Brazilian beef exports to grow by 3.6% in 2024, as beef production is forecasted to increase by 2.6% next year.

Short-term price outlook. Brazilian beef export prices totaled USD 4.60/kg in Oct-23, up in MoM) terms for the second consecutive month, rising by 1.3%. The increase, albeit small, is significant as seasonality pointed to a MoM decline. However, in YoY terms, prices remain considerably subdued, down by 21% versus Oct-22 levels. Moreover, compared to October's previous five years' average, prices were down by 3%, reflecting an oversupplied global market. The historical trend suggests further downside ahead, but prices aren’t expected to fall significantly below this barrier. On the other hand, fundamentals point to a limited upside derived from ongoing global production growth. Therefore, prices are predicted to remain mostly flat in the upcoming months.