W25: Beef Update

In W25 in the beef landscape, the FAO estimates global meat production in 2023 to reach around 364 million mt, an increase of less than 0.5% YoY, corresponding to an annual gross addition of only 1.3 million mt. However, global beef production is expected to decrease by 0.26%, primarily due to a decline in the number of cattle being raised, high feed costs, and a shortage of forage in various producing regions. These downward projections mainly apply to Europe and North America, whereas increases in production are anticipated in Asia, South America, and Oceania. However, these increases are not sufficient to offset the overall global decline. The projected beef production represents approximately 20.91% of the estimated global meat production.

USMEF reports that in Apr-2023, US beef exports to Mexico amounted to 14.4 thousand mt, valued at USD 81.8 million, up 10% YoY in volume and 18% YoY in value. This was driven by a strong Mexican Peso and robust food service demand. In Jan-Apr 2023, US shipments to Mexico totaled 64.91 thousand mt, valued at USD 365.4 million, up 14% in volume and 17% in value compared to the same period in 2022. These totals included 32.91 thousand mt of beef variety meat, up 13% YoY, valued at USD 93.9 million, up 19% YoY, with Mexico as the leading volume destination for US beef variety meat exports.

According to GCMA, until May-2023, Mexico's meat imports grew by 8.3%, while exports decreased by 15.3%, and a significant fall in the value of 20%. Specifically, in the five-month period, Mexican meat exports amounted to 214.44 thousand mt, valued at USD 1.1 million, with a decrease of 32% in price/mt. Imports reached 1.1 million mt, valued at USD 2.28 million, with a decrease of 11% in price/mt. This situation is attributed to the strength of the Mexican Peso, which has made imports more competitive, while Mexico's exports have suffered due to lower prices and increased competition. GCMA expects Mexican beef exports to the US to recover in the second half of 2023 due to a 4% reduction in US beef production, with an expected increase of 2-3% compared to 2022. In the first five months of 2023, Mexican calf meat exports reached 131.2 thousand mt, a decrease of 12.9%, valued at USD 6,473/mt, down 8.5%, and a 20% lower total value. Mexican calf meat shipments were mainly destined for the US, Japan, Canada, South Korea, and Hong Kong, with a value of USD 849.2 million, down compared to over USD 1.066 billion in 2022. On the contrary, imports increased by 14% in volume to 76.1 thousand mt, 18.8% in price, and 60.6% in total value, mainly sourced from the US, Canada, and Nicaragua, accounting for almost 99% of Mexico's purchases. Additionally, Mexican live cattle shipments amounted to 515.3 thousand heads, up 37.4% compared to the same period in 2022, with a 16.9% higher value at USD 709 per head. The bovine trade balance, including meat and live cattle, remains in surplus but lower than in 2022 at USD 626.2 million.

In the Jan-Apr period, Canadian beef import value from the EU amounted to USD 25 million, down 34.2% compared to the same period when the value totaled USD 38 million. Euro Meat indicates that this decline signifies a short-term change in trade patterns. From 2018 to 2022, there has been a significant increase in EU beef shipments to Canada, primarily sourced from Spain, Ireland, Italy, and other EU countries. In 2018, EU beef shipments to Canada were valued at USD 15 million, which rose to USD 114 million by 2022. The surge in EU exports followed the signing of the European Union Trade Agreement with Canada (CETA) in 2017. Conversely, Canada has faced challenges in exporting beef to Europe, despite having a duty-free quota of 65 thousand mt under the CETA agreement. The Europeans have imposed technical barriers on Canadian beef, including objections to the carcass washes used in Canadian meat plants.

At the beginning of W25, the value of fat cattle in Paraguay reacted upward for all categories, after several consecutive weeks of falling prices, with the lowest price for males at USD 3.10/kg/hook. Valor Agro indicates that the purchase value increased by an average of USD 0.10, with specific deals closed at slightly higher prices. There is a higher buying pressure observed for females in the sector. Therefore, the average reference price for males and heifers rose from USD 3.10/kg carcass to USD 3.20/kg carcass, while the price for cows increased from USD 2.70/kg carcass to USD 2.80/kg carcass. Traders indicate that the increase in prices was due to the low supply of animals, as farmers are reluctant to sell at current market prices and instead prefer to add weight to their animals with available pasture. However, there is concern within the industrial sector regarding market conditions, particularly in Chile, where signs of falling prices for July have emerged. CICCRA data indicate that in May-2023, Argentine cattle slaughter amounted to 1.28 million heads, an increase of 15.4% YoY, considering the adjustment of the number of working days. The rise in female cattle slaughter, accounting for 48.3% of the total, can be attributed to the recovery of beef exports to China. With an average hook weight of 225kg, Argentine bone-in beef production in May-2023 reached 288 thousand mt, up 12.1% YoY, considering the adjusted series for the number of working days. In Jan-May 2023, Argentine cattle slaughter reached 6 million heads, up 12% compared to the same period in 2022. During the first five months of 2023, Argentine bone-in beef production totaled 1.358 billion mt, an increase of 10.2% YoY compared to the same period in 2022.

Just days before the Eid-al-Adha, the sales of animals in the Turkish markets experienced an acceleration. A comparison with 2022 reveals an increase in demand for cattle sacrifices, while the interest in sheep and goats decreased. In the Yenibosna Çobançeşme market in Istanbul in Turkey, on average, 80% of the cattle were sold, and sellers anticipate that all cattle can be sold by the upcoming weekend. The average prices for cattle in the Qurban markets start from USD 3,485.27-5,421.52. Small cattle prices range from USD 309.80-580.88. In 2023, Turkish customers are showing more interest in cattle for the Eid-al-Adha sacrifices.

Lastly, in Jan-May 2023, Ukrainian frozen cattle meat exports amounted to 9.5 thousand mt, valued at USD 37.7 million, with May-2023 accounting for 2.5 thousand mt, worth USD 10 million. In the first five months of 2023, Ukrainian shipments were mainly destined for China (65.5%), Azerbaijan (12.4%), and Uzbekistan (7.5%). Meanwhile, in the Jan-May period, Ukrainian frozen cattle meat imports amounted to 728mt, valued at USD 3.8 million, with May-2023 accounting for 162mt, worth USD 1 million. Ukrainian import shipments were mainly sourced from Lithuania (34.4%), Austria (33.2%), and Brazil (17.3%).