The USDA forecasts that US beef imports in 2023 will total 3.501 billion pounds, which would represent an annual increase of 3.2% YoY, the highest level since 2005. Imports are expected to increase even more in 2024 to 3.56 billion. The main reason behind the anticipated import increase is the expectation of much lower domestic beef production this year and the next due to a significant reduction in the cattle herd. Drought conditions throughout 2022 incentivized culling, which translates to increased beef production. But as weather conditions improve, the US will enter into a cattle herd rebuilding process which will limit production this year and the next. Beef production in 2023 is expected to be 26.92 billion pounds, which would represent a YoY decline of 4.8%. Meanwhile, beef production in 2024 is expected to be 24.75 billion pounds, which would represent a significant reduction of 8.1% YoY.
In Q1 2023, the US imported more beef from Canada, Australia and Uruguay, while it reduced its imports from Mexico and Brazil. According to the latest USDA data, the US imported 956 million pounds of beef in Q1-2023, which represents a decline of 3% YoY. Declining imports from Mexico and Brazil and also from Nicaragua and New Zealand, managed to more-than-offset import gains from Canada, Australia, and Uruguay.
Comparing Q1-2023 imports to the imports for a first quarter from 2018 to 2022 (five-year average), imports from Brazil and Uruguay registered the fastest growth; imports from Canada and Mexico were also growing by double-digit rates, while exports from Australia, New Zealand and Nicaragua were declining.
The larger need for beef from outside presents opportunities for existing markets which are expanding their production. The rise in imports from Australia during Q1 2023 represents the recovery in Australian production so far this year. Mirroring the current situation in the US, Australia suffered drought conditions in previous years which resulted in significant beef production drops in 2021 and 2022, which in turn led to significant drops in exports. A lower availability out of Australia made the US increase its imports from Brazil and Uruguay. However, this Q1-2023, Australia regained some of the lost market share, although it is still significantly behind its 5-year average numbers. As Australian production recovers, its market share could return to what it was before 2021 and 2022. Taking into account that the US is also a major beef exporter (recording exports of 779 million lb in Q1 2023), its drop in production will open opportunities for other countries to gain market share in other major beef importers such as Japan and South Korea.
Source: Tridge and USDA
Opportunities for newer participants might open up as well. As mentioned in this past analysis, the market in the US could be opened to Paraguayan beef after the period for comments in a proposal launched by the USDA is set to finish this May.
Brief note: Mad-cow disease detected in the US is not expected to result in trade changes. An atypical case of mad-cow disease was detected in South Carolina on Friday, May 19th. However, the USDA mentioned this shouldn’t result in trade issues.