W52 Beef Update: Russia Exports Surge Despite Lower Production, Irish Beef Prices on the Rise, and Chinese Demand to Argentina Beef Booms

Russia's Livestock Output Dips, But Exports Surged in 2023

The livestock figures for Russia as of the end of Nov-23 were detailed in the report on the country's socio-economic situation for the first eleven months of 2023 by the Russian Federal State Statistics Service (Rosstat). Cattle saw a modest decline of 1.7% year-on-year (YoY), totaling 17.4 million heads, while sheep and goat numbers dropped by 1.7% YoY to 20.8 million heads by the end of Nov-23. Farms of all categories produced 14.6 million metric tons (mmt) of live weight for slaughter, representing a 1.9% YoY increase.

Livestock exports reached 660 thousand mt, with 150 thousand mt of rams and 90 thousand mt of cattle in the first eleven months of 2023. The Middle East and Muslim countries emerged as key export destinations, solidifying a generally positive export outlook, likely fueled by both volume and favorable conditions. Belarus took the top spot due to import diversification, supplying half the total volume. Brazil and other countries defined as friendly states filled up the remaining import volume.

In 2024, the Russian Federal Government will double its state support for Kalmykia's agro-industrial complex. Beef cattle breeding will receive USD 3.8 million, and sheep and goat breeding will receive USD 1.3 million. This funding boost will enable agricultural enterprises and peasant farms to expand their livestock, contributing to national food security and potential increases in meat and wool exports. Kalmykia holds a prestigious position in Russia for producing fine wool, lamb, and pedigreed sheep. The region's meat is renowned for its quality, solidifying its status as a national brand. The doubled state support from the Ministry of Agriculture of the Russian Federation reflects this importance, aiming to bolster both beef cattle, sheep, and goat breeding sectors.

Actionable Recommendations

Given the YoY decline in livestock figures, buyers should monitor market trends closely. Engage with local suppliers in Kalmykia benefiting from increased state support. This may ensure a stable and diversified source of meat and wool products.

Suppliers should explore export opportunities, especially to the Middle East and Muslim countries, which have shown consistent demand. Diversify import sources to include Belarus and other friendly states for improved access to Russian livestock.

Irish Beef Prices End 2023 on a High Note as Global Demand Strengthens

Irish bovine markets concluded 2023 in a robust ascendancy, with factory quotations across all categories experiencing further upward trajectories in W52. Processors largely recommenced operations post-Christmas recess on December 27, with already-filled kill sheets for the week indicative of purchases predominantly concentrated in the past fortnight.

Heifers took the lead in the surge, experiencing a year-over-year (YoY) increase of USD 0.047 per kilogram (kg), with most reaching prices exceeding USD 5.58/kg on the grid. Premium heifers can fetch prices as high as USD 5.69/kg. Steers also saw a similar trend, commonly priced at USD 5.56/kg on the grid, and select batches potentially reaching up to USD 5.67/kg, indicating a 3.4% YoY rise. Despite a decline in finished steer supplies, finished heifer supplies remain steady. Buoyed by sustained robust demand for bovine meat, cow prices also experienced a surge this week. U-grade cows were quoted at USD 5.01/kg, with R, O, and P-grade categories encompassing a range of USD 4.68 to 4.87/kg and USD 4.44 to 4.56/kg, respectively. Both under-24-month and under-16-month bulls enjoyed price increases at select processing outlets. U-grade bulls commanded a range of USD 5.69 to 5.80/kg, R-grade USD 5.56 to 5.70/kg, O-grade USD 5.43 to 5.53/kg, and P-grade USD 5.25 to 5.34/kg. Under-16-month bulls are quoted at USD 5.43 to 5.48/kg on the grid.

Actionable Recommendations

With Irish beef prices on the rise, buyers should consider negotiating long-term contracts to secure favorable pricing. Consider purchasing heifers for potentially better value compared to steers. Monitor market dynamics for potential fluctuations and adjust procurement strategies accordingly.

Irish beef suppliers should capitalize on the robust demand. Ensure consistent quality and consider promotional activities to further enhance global competitiveness. Increase heifer breeding to meet rising demand and capitalize on premium prices.

China Dominated Argentine Beef Exports Despite Price Drops

Argentina's Nov-23 beef export landscape was characterized by Chinese dominance despite significant price reductions, persistent weakness in the European market, and stagnant or declining trade with other key destinations. Despite price drops exceeding 40% compared to mid-2022 highs, China remained the primary destination for Argentine beef in Nov-23. Absorbing a staggering 82.5% of the total exported volume, nearly 36 thousand mt, Chinese demand surged almost 20% YoY.

Chilled boneless beef exports to Europe saw a modest 7.4% month-on-month (MoM) increase, reaching 3.9 thousand mt. However, this uptick failed to mask the underlying trend of a weakened European economy. Notably, Nov-23 shipments under Quota 481 decreased nearly 900 mt YoY, indicative of subdued European demand.

Shipments to Chile, Israel, and the United States (US) continued to languish. At 1.8 thousand mt, Chilean imports indicate a 21.2% YoY decline, burdened by competition from Paraguayan and Brazilian suppliers. Kosher meat exports to Israel experienced a drastic falloff following the cessation of rabbinic activity in Sep-23, with only 614 mt of chilled and 435 mt of frozen beef products shipped in Nov-23. Similarly, shipments of chilled meat to the US plummeted to around 414 mt.

Actionable Recommendations

Buyers should evaluate the pricing dynamics of Argentine beef and consider the cost-effectiveness despite the significant price drops. Negotiate further price reductions with Argentine suppliers due to lower post-mid-2022 highs. Leverage the competitive prices to increase procurement from Argentina, especially for the Chinese market. Consider increasing chilled boneless beef purchases from Europe if market fluctuations present favorable opportunities.

Suppliers should investigate kosher meat processing options to re-enter the Israeli market following rabbinic activity resumption. Explore alternative markets beyond China to reduce dependency, particularly Chile, Israel, and the US, to address declining demand. Maintain a competitive edge by optimizing costs without compromising quality of Argentine beef.