W20: Beef Update

In W20 in the beef landscape, the USDA reports that, in the 2013-2023 period, the global beef market grew from 9.1MMT to 12.07MMT, up 12%, with increases in beef shipments registered in Brazil (+62%), Argentina (+327%), the EU, the US, Canada, Uruguay, Paraguay, and New Zealand. However, over the same period, Indian beef shipments fell from 1.765MMT to 1.475MMT, while Australian beef exports dropped 193K MT to 1.4MMT in 2023 due to the drought. In the last two decades, the global beef trade increased from 6.4MMT to 12.07MMT, a growth of 88%. However, in 2022, the value of world beef exports can be estimated at around USD 55B, forecasting a drop of around 15% for the current year. Epizootic haemorrhagic disease (EHD) has been identified in cattle for the first time in Europe. At the end of 2022, the disease was diagnosed in Sardinia and later in Sicily in Italy. In addition, hotspots of the disease have also been found in the south of Spain. Scientists assume that mosquitoes that transmit the virus were carried by the wind across the Mediterranean Sea. The Mercosur Steer Index lost ground again during W19 after falling 6 cents on the US Dollar and settling at USD 3.50/kg carcass, its lowest level since the end of January. The appreciation of the Brazilian Real against the US Dollar prevented a drop in the raw material in Brazil, where the average of the exporting states remained at USD 3.15/kg for meat. Meanwhile, in the markets of Uruguay and Argentina, it operated downward, remaining at USD 4.10/kg and USD 4.08/kg, respectively. On the other hand, Paraguay held steady at USD 3.40/kg.

The USDA confirmed an atypical case of Bovine Spongiform Encephalopathy (BSE), a neurologic disease of cattle, in an approximately five-year-old beef animal at a slaughter plant in South Carolina in the US. The USDA noted that the animal never entered the slaughter channels and at no time presented a risk to the food supply or to human health in the US. The Ministry of Agriculture, Food and Rural Affairs announced that starting on May 22nd, the spot inspection rate for US beef will be increased from the current 3% to 10%, as a provisional measure. The USDA also reports that US placements of cattle in feedlots during April 2023 totaled 1.75M heads, down 4% YoY, towards the middle of pre-report expectations. The YoY decline is attributed to tighter available numbers. While US corn prices have softened and pasture conditions have improved in some US states, other major feeding areas continue to face drought conditions and tight hay supplies.

Tridge’s analysis indicates that Brazilian beef export value (excluding derived products) in April 2023 fell by 45.9% YoY, the worst annual decline in a single month since the 2008/09 financial crisis. The decline in value was a result of a drop in beef exported volume at 110K MT, down 30% YoY and the lowest level since November 2021. Also, the average export price totaled USD 4.79/kg, down 23% YoY and its lowest level since May 2021. For the first four months of 2023, Brazilian beef export value totaled USD 2.51B, down 30% YoY, with total volume at 521K MT, and the average price at USD 4.83/kg, both down 16% YoY. The decline is attributed to the export suspension to several countries from late February to late March. Major importers shifting import origins also contributed to the decline. Brazilian export volume could see a recovery in May 2023, but multi-year low prices will still result in subdued total value. In the UK, average prices for cull cows have remained historically strong since the start of 2023, with growth felt particularly in the first two months. In the week ending May 13th, the GB dead-weight average cow price stood at USD 4.75/kg, up USD 0.30 YoY. From a supply perspective, weekly estimated GB cow slaughter has largely run above year-ago levels for 2023 so far. Estimated kill stood at 177.3K heads for the first 19 weeks of 2023, up just over 3% from the same period in 2022. While cow kill remains elevated YoY, numbers have followed the seasonal trend, easing back compared to the throughput seen pre-Christmas. UK domestic retail demand for beef remained relatively firm in the 12 weeks ending April 16th compared to the same time period in 2022.

In New Zealand, red meat exports continued to reflect the difficult global economic conditions, with exports in March totaling USD 1.1B, down 4% YoY. Specifically, New Zealand’s beef exports in March 2023 totaled 48.63K MT, valued at USD 416M, up 9% YoY in volume but down 8% YoY in value. In Q1 2023, New Zealand’s total meat exports were valued at USD 2.8B, down 11% compared to Q1 2022, while beef value amounted to USD 1.1B, down 15% over the same period. According to MIA experts, tough economic conditions in some of New Zealand’s major markets impacted the value of meat exports, particularly when compared to March 2022, when export volumes were relatively low and values relatively high, including record levels for beef. Tridge’s analysis indicates that warnings for the current foot-and-mouth disease in South Korea were increased on May 19th, 2023 as 11 cases have been detected so far. Beef prices are now rising in the affected North Chungcheong province in South Korea. If the outbreak expands, domestic beef supply disruptions will likely trigger higher prices and more imports of beef and other meat products. In April 2023, in Ukraine, the average consumer price of beef was USD 5.71/kg, up 2.2% MoM and down 2.5% YoY. Lastly, AGRIBANK data indicates that Namibian cattle sales in March 2023 reached 22.05K, up 49% MoM. There was a surge in sales across all cattle sales activities, with live animal exports rising by 103% (8,142 heads). The intermittent rainfall that led to the degradation of vegetation between March and April 2023 prompted farmers to sell some of their livestock to avoid the loss of livestock due to drought.