W18: Beef Update

In W18 in the beef landscape, the USDA indicates that 2023 global beef production is expected to fall by 0.3%, a slight downturn. The largest reduction is anticipated to be in the US, the world’s largest producer, with a drop of almost 5.4% in volume. 2023 Brazilian beef production is projected to reach 10.57MMT, remaining the second largest producer, with an annual growth of 2.1%. EU beef production in 2023 is forecast to amount to 6.7MMT, a drop of 0.5% YoY. In March 2023, US beef exports totaled 120.5MT, valued at USD 892.6M, down 5% YoY in volume and 17% YoY in value, but both volume and value were the highest in five months. In Q1, US beef exports reached 326.49K MT worth USD 2.35B, down 8% YoY in volume and 22% YoY lower in value. US beef exports faced considerable headwinds late last year and at the beginning of 2023, but the March results show some encouraging trends, with most Asian markets showing renewed momentum in March, while exports continued to trend higher to Mexico, the Caribbean, and South Africa. MLA indicates that Australia’s red meat exports maintained a strong pace in April, despite several public holidays cutting into the number of working days. Australian April beef exports totaled 72.06K MT, down 27% MoM but up 17% YoY. Strong YoY increases were recorded in Australian shipments to China (42%), Japan (10%), South Korea (27%), the US (26%), and Indonesia (14%), while exports to all other markets dropped by 17%. Grass-fed beef exports rose slightly more than grain-fed shipments, which is to be expected given the uptick in supply overall, and frozen exports rose considerably more than chilled exports, though both did increase. MLA also indicates that in 2022, the supply of grown steers in Queensland fell 17%, while in 2023, YTD volumes are already 24% lower. Strong rainfall in 2022 and Queensland’s subsequent decline in heavy steer supply in 2023 are both factors pointing towards a strong supply of grass-fed bullocks hitting the market in the second half of 2023. Queensland's weekly cattle slaughter is already operating 30% higher in YTD terms compared with 2022, indicating improved processor capacity.

In W1 of May, Tridge’s price index indicates that Brazilian wholesale beef prices plunged 12.5% MoM and 6% YoY, their lowest level in at least two years. Beef prices fell as cattle prices were also declining on the back of ongoing high supply, and demand growth not managing to offset it. Nonetheless, moving forward, current low prices are expected to boost demand, leaving a limited downside for prices. In the coming weeks, Mother's Day Holiday is also expected to bring more consumption, reflecting higher prices. In April 2023, Brazilian live cattle ready for slaughter were offered an average price of USD 57.05, an improvement of 1.4% MoM and down 14.7% YoY, a retreat for the sixth consecutive month annually. In the first four months of 2023, the average price reached USD 57.06 per arroba, a drop of 15.8% compared to the same period in 2022. In the last 12 months, from May 2022 to April 2023, the average price reached USD 59.85 per arroba, down 5.6% over the same immediate previous period. In 2023, the visible drop in purchasing power affected the domestic beef market, leading to migration to lower-value products. SENACSA reports that, in the first four months of 2023, Paraguayan beef exports totaled 95.49K MT, valued at USD 445.2M, a slight decrease in volume and a more pronounced fall of 13% in value. The drop in value is attributed to the lower income of foreign exchange, which until April 2023 reached USD 4,663/MT, while in the same period of 2022, it traded at USD 5.32K/MT. Tridge’s data analysis indicates that Hanwoo beef prices continued to drop, down 6% WoW and 26% YoY, now at a fresh multi-year low of USD 6.77/kg for 2B grade beef in Naju, South Korea. Prices are being officially discounted to promote demand and manage to offset increasing supply. Cattle herd numbers are expected to reach a record in 2023. Moving forward, prices are expected to increase as demand increases due to the promotion efforts and low prices eventually incentivize consumption of this product. Lastly, the first container of Irish beef arrived in the port of Shanghai in China in W17, after the lifting of a ban imposed by Chinese authorities following an isolated case of atypical BSE in Ireland in May 2020. The lifting of the ban by GACC paved the way for an extensive relaunch and promotional campaign by Bord Bia’s Shanghai office for the coming months.

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