W2 Beef Update: Uruguay Tops Steer Prices, Paraguay Strengthens, While Brazil and Argentina Face Challenges in Early 2024

Beef Prices Surge in Argentina Due to Inflation

In Dec-23, beef prices in the local currency (ARS) in Argentina's Buenos Aires Metropolitan Areas of Rosario and Córdoba surged by 40.9% compared to the previous month, with a staggering year-on-year (YoY) increase of 307.3%, as reported by the Argentine Beef Promotion Institute (IPCVA) based on its survey. Similarly, fresh chicken prices exhibited a 21.7% month-on-month (MoM) increase in Dec-23 and a substantial 239.6% YoY increase across the analyzed regions.

Conducted during the first and third weeks of Dec-23, the comprehensive IPCVA survey included the analysis of over 30 thousand price points per week across the surveyed locations. The survey revealed price variations in neighborhoods with distinct socioeconomic levels, with a 36.8% MoM increase in high-socioeconomic areas, 41.7% MoM in average-socioeconomic areas, and a similar 41.7% MoM rise in low-socioeconomic areas.

Additionally, specific beef categories, such as steer meat, heifer, and veal, saw varying price increases, ranging from 38% MoM to 46.4% MoM, compared to Nov-23. The MoM behavior of beef prices exhibited upward trends across all surveyed Metropolitan Areas, including South of Buenos Aires (+45%), Federal Capital (+36.8%), Northern Buenos Aires (+42.8%), and Western Buenos Aires (+40.1%). Notably, butcher shops experienced a 47.9% MoM price increase, while supermarkets observed a 25.3% MoM rise.
In Nov-23, Argentina’s beef exports exhibited a robust 11.9% year-on-year (YoY) growth, resulting in 58.7 thousand metric tons (mt) of exports. The cumulative shipments for the first eleven months of 2023 reached 611.7 thousand mt, marking a significant 5.8% YoY increase. Moreover, Nov-23 saw an impressive 18.4% month-on-month (MoM) surge in the shipped volume.

Despite the positive volume growth, beef exports witnessed a 10% YoY decline in volume and a substantial 22.2% YoY drop in the accumulated value. The average price in Nov-23 settled at USD 3,673/mt, signifying a 19.5% YoY decrease. China remained the dominant export destination, accounting for 77.8% of total shipments with 476 thousand mt in the Jan-Nov 2023 period. However, the average price to China experienced a significant 33.8% YoY decline, reaching USD 3,147/mt, resulting in a 29.6% YoY reduction in sales income to USD 1,498 million.

Israel, Germany, and the United States (US) followed as key export destinations. Israel witnessed sales of 33.4 thousand mt for USD 205.1 million, Germany recorded purchases of 22 thousand mt amounting to USD 225.3 million, and the US imported 21.8 thousand mt valued at USD 116.9 million.

Uruguay Resumes Leadership in 2024 Steer Prices

At the onset of 2024, Uruguay reclaimed its position with the highest regional steer prices in Mercosur, a status commonplace during the peak of Chinese demand in 2018 and 2019. This marks a resurgence, last observed briefly in May-23. The Uruguayan beef market exhibits strength, particularly for prairie steers, closing the week at USD 3.50 per kilogram (kg) carcass weight, reflecting a notable week-on-week (WoW) increase of approximately USD 0.15/kg.

While not all steers command this price, even single-truck transactions reach this value, hinting at potential incremental gains for larger volumes. In Paraguay, the market for slaughtered males is robust, witnessing an increase to USD 3.40/kg carcass weight in W2, rising to USD 3.45/kg for European Union (EU) routes.

Conversely, Brazil and Argentina experienced a downward trend. In Brazil, the average value of fat cattle in key exporting states dropped USD 0.02 WoW, reaching USD 3.03/kg carcass weight. Meanwhile, Argentina's export steer prices remained stable in ARS terms for the third consecutive week, but a weakening exchange rate led to a USD 0.19/kg WoW decrease in the reference in USD, settling at USD 3.43/kg carcass including the current 9% meat export tax.