Brazilian Beef Exports Drop to 3-Month Low in October, but YTD Exports Break All Records

Brazilian beef exports in terms of value totaled $1.103 billion in October 2022, the lowest level in three months. Likewise, Brazilian beef exports in terms of volume were 189 thousand mt, also the lowest level in three months.

Nonetheless, the year-over-year (YoY) increase was formidable. Despite a 9% drop from September, October 2022’s export value was 160% higher than October 2021's. This was the largest interannual gap on record. Meanwhile, volume dropped 7% MoM, but grew 129% YoY. This was the largest YoY increase in a month since 2001.

Most of the YoY increase can be explained by abnormally low export levels in Q4 of 2021, which had dropped due to halted shipments to China, Brazil’s largest export market. Shipments were stopped in September 2021 due to the detection of mad-cow disease. The ban was lifted in December 2021.

The average export price in October was $5.85/kg, the lowest level since February 2022. This represents a decline of 2.5% MoM. Prices are now down 14% from their record high of $6.82/kg in June. Prices have been declining on the back of lower domestic demand and ongoing growth in global beef supply. Additionally, input prices have been declining since their peaks in the middle of the year.

Nonetheless, prices were 13% above October 2021's levels. It's worth noting that as prices began declining MoM in June, the gap between 2022 and 2021 prices had also been shrinking, but October reversed that trend. Nonetheless, this may also be due to the lower-base effect mentioned above, as prices had dropped 12% MoM in October last year given the decline in Chinese demand.

Source: Tridge and Brazil Ministry of Economy

Year-to-date exports in value and volume amount to new records. Brazilian exports in terms of value so far this year (January-October 2022) have reached their highest value on record for any year (Jan-Dec periods), at $10.3 billion. This increase is due to a 25% YoY increase in exported volume, at 1,690 thousand mt (also a record high for a Jan-Oct period), and to a 20% YoY increase in the average price, at $6.08/kg (a record high, as well).

Export volume in 2022 has grown on the back of strong Chinese demand throughout the year. Chinese demand strengthened in recent months just before the autumn holidays and also due to shipments meant for the New Year celebrations. Strong US demand earlier in the year also boosted Brazil’s export volumes. The US became increasingly dependent on Brazilian beef, due to supply shortages in Australia. Australia is rebuilding its herd, and fewer cattle were being slaughtered early in the year.

Prices have been consistently above 2021 levels on renewed demand following the lifting of pandemic restrictions and on much higher input prices. Nonetheless, the current beef price trend points downward.

For 2023, export volume and value from Brazil could subside from 2022’s records as China, according to the USDA, is expected to substantially lower its beef imports next year, due to an increase in its own supply and a decrease in its domestic consumption.