Frozen Beef Prices Increasing in Japan, Decreasing Globally, Due to Japanese Yen Depreciation

In September 2022, Japanese importers paid the second highest price for a kilo of frozen beef since at least January 2021, at 772 JPY/kg. This represents a 0.2% increase month-over-month and a 38% increase year-over-year. This price increase is due to a weakening yen, and occurred despite falling export prices from major producing countries or regions like the US, Australia, Brazil and the EU. In fact, if the average Japanese import price is converted to US dollars, prices declined 5% MoM and increased only 6% YoY.

In September 2022, Japan imported frozen beef from 6 major origins, Australia, with 40% of the total share, United States, with 31%, Canada, with 14%, New Zealand, with 7%, Mexico, with 4%, and the European Union, with 3%. The rest of the origins comprised only 1% of the total.

In terms of each origin currency, import prices increased YoY in Australia by 15%, in the EU by 49%, in Canada by 9%, in New Zealand by 35%, and in the United States by 7%. Prices have also increased in terms of the origin currency since these prices are import prices, which include freight costs which are typically priced in US dollars. The only case in which import prices in terms of the origin currency have decreased is Mexico, with a decline of 15% YoY.

In terms of the Japanese yen, import prices for Australian frozen beef have increased by 37%, from the European Union by 63%, from Canada by 35%, from Mexico by 11%, from New Zealand by 48%, and from the United States by 39%.

These much larger increases in terms of Japanese yen correspond to the depreciation of the yen against the currencies of the importer. The Japanese yen decreased YoY in September 2022 by 16% against the Australian dollar, 9% against the Euro, 19% against the Canadian dollar, 23% against the Mexican Peso, 9% against the New Zealand dollar, and 23% against the US dollar.

Source: Tridge, Japan Trade Statistics, and World Bank

The movements of the Japanese yen in October and November 2022

The Japanese yen reached a multi-decade high of 150 yen per dollar in late October 2022. This will likely reflect in high import prices as well. One of the main reasons behind the Japanese yen depreciation against other currencies, specially the US dollar, is the lack of increases to their reference interest rate, in contrast to other major trade partners. However, so far in November, the Japanese yen has eased 2%. While it’s soon to speak about a trend reversal, it might help ease import prices in the very short term. In the meantime, a weak yen could result in an increased inflow of imports from origins with lower average prices and/or beef cuts of lesser desirability.