Brazil Beef Export Prices Continue to Fall, But Decline Pace at its Slowest in Over a Year

Brazilian Beef Prices Continue Downward Trend in 2024

The average price of Brazilian beef exports continued its decline in Jan-24, marking its second lowest level in three years. In Jan-24, the average price of Brazilian beef exports, excluding derived beef products (“in natura”), decreased by 0.5% month-on-month (MoM) and by 7% compared to the same period last year. The small monthly decline was anticipated, as prices typically peak in summer and then decrease throughout winter, before rebounding in spring.

Regarding year-on-year (YoY) comparisons, prices have been declining for thirteen consecutive months, although it’s worth noting that the rate of decline has slowed down notably. The decline began in Jan-23 and peaked at 28% in June. Since then, the pace of decline has gradually slowed, reaching the current rate of 7%, as illustrated in Figure 1.

Figure 1. Brazilian Beef Export Prices from Jan-23 to Jan-24

Source: Tridge and Brazil's Ministry of Development, Industry, Trade and Services

Brazilian beef export prices are highly correlated with domestic wholesale prices and finished cattle prices ("boi gordo"). In terms of the Brazilian real, export prices in Jan-24 fell by 12% YoY, while wholesale chuck prices fell by 15%, and finished cattle prices fell by 13%. In all categories, the YoY decline pace has been slowing down but prices remain inside a downward trend.

According to Brazil’s Center for Advanced Studies in Applied Economics (Cepea), wholesale beef demand has been relatively low, and therefore, cattle processors aren't looking to sell more, particularly in light of current prices. Nonetheless, the same organization mentions there are expectations of demand recovery after Carnival, which ended on Tuesday, February 13th. Cepea also mentions that demand for export beef has been relatively higher than in the domestic market, but this is yet to be observed in the export figures.

Figure 2. Comparison of Brazilian Beef Prices from Sep-22 to Feb-24

Source: Tridge, Brazil's Ministry of Development, Industry, Trade and Services and CEPEA

Brazilian Beef Production Is Expected to Continue Growing

According to the United States Department of Agriculture (USDA), Brazilian beef production is expected to increase by 2.6% YoY in 2024 to 10.84 million metric tons (mmt) carcass weight equivalent (cwe). Exports are expected to increase by a similar rate of 2.7% YoY. According to the latest data from Brazil’s Institute of Geography and Statistics (IBGE), cattle slaughter during the fourth quarter of 2023 (preliminary) was the highest on record in terms of head (9.05 million) and weight (2.4 million mt). This development will remain pressuring prices downward throughout the rest of the year.

Nonetheless, easing prices will eventually boost global demand, capping further downside. The boost in demand expected from lower prices will be greater if beef continues to experience larger price declines than poultry and pork, its natural substitutes. In fact, as of Jan-24, the prices of Brazilian poultry and pork exports declined rapidly compared to the same period the previous year, even more so than beef prices. However, compared to the prices at the beginning of 2022, when global inflation began to accelerate, beef prices have decreased more than poultry or pork prices. This has resulted in a net increase in relative competitiveness for beef.

Moreover, lower domestic production in the significant United States (US) market will increase demand for imported beef, with Brazilian exports standing to benefit from this scenario. In the end, prices are expected to stabilize around their current five-year average (prices are currently down 2% from the last five January’s average level). While this level is relatively lower than 2022’s and 2023’s, it remains considerably higher than pre-pandemic levels.