Brazil’s Beef Exports Plunge in February As China Suspension Hits; Exports to Resume by Late March

According to the latest Brazil Ministry of Economy data, Brazilian beef exports (excluding derived products) plunged in February 2023 to their lowest levels since late 2021, at 126.4 thousand mt worth $613.9 million, down 20% year-over-year (YoY) in volume and 30% YoY in value. The average export price remained practically unchanged from the previous month, but fell 13% compared to the same month in 2022, at $4.85/kg.

Source: Tridge and Brazil Ministry of Economy

This came after Brazil suspended its beef exports to China on February 22, 2022, following the detection of a case of mad cow disease in the state of Pará. The largest export market for Brazilian beef is China, which, in 2022, had a market share of 54% in terms of volume and 61% in terms of value, according to Brazilian Meat Packers Association (ABRAFRIGO) data. Following the announcement of the export suspension to China, the Brazilian government announced it was also suspending its beef exports to Thailand, Iran, Jordan, and Russia, with the former three comprising beef exports from all of Brazil and the latter only beef exports from Pará state. According to ABRAFRIGO data, Thailand, Iran, and Jordan together comprised 0.9% of Brazil’s beef export volume in 2022, while Russia made up 2.1%.

In early March, it was reported that the case in Pará was officially deemed "atypical" and therefore not posing risks of contamination to other animals or humans. This information accelerated the process to resume exports to China as soon as possible. In fact, local reports mention that exports will likely resume by the end of March, coinciding with a visit of the Brazilian president to China. This also coincides with earlier expectations that exports would likely resume by April. With this information, this case contrasts with the late 2021 suspension of exports to China, which lasted for 100 days, severely impacting Brazilian exporters, with losses of over $1 billion.

Brazil continues to explore more markets to export its beef. Just this March 7, it was announced that Brazilian beef can now be exported to Mexico, as the latter approved fresh, chilled and frozen beef with bone coming from Brazil's Santa Catarina state, and aged and boneless beef coming from other states.

For now, Brazil’s domestic wholesale prices are having mixed reactions. As one of Brazil’s options to mitigate the losses derived from the suspension of exports to China was redirecting some of the supply into the domestic market, there was an expectation of lower domestic prices in the very short term. According to Tridge data, this happened in some cuts in the Sao Paulo wholesale markets, as prices for tenderloin and chuck dropped 6% and 7% week-over-week in the last week of February. However, other cuts saw mild price increases, as was the case in markets such as Pernambuco. A reported slightly slower pace of culling might be limiting the downside. All in all, prices are currently in a downward trend mainly on increased demand for chicken, a cheaper meat alternative to beef.

Source: Tridge

In 2023, total Brazilian beef exports are expected to subside at least in value due to lower prices, but there is also pressure on export volumes due to expectations of lower demand from China, independently of the recently announced suspension. According to the USDA, China is expected to substantially lower its beef imports in 2023, due to an increase in its own supply and a decrease in its domestic consumption. Meanwhile, ABRAFRIGO mentioned in January that it was expecting a lower export value in 2023 due to a decline in prices, which will be exacerbated by this temporary suspension of exports to China. So far 2023, Brazil’s exports are down in annual terms by 3% in volume and 13% in value, with the average export price down 11%.