W31: Beef Update

In W31 in the beef landscape, the Center for Advanced Studies in Applied Economics (Cepea) reports that Brazil's beef exports amounted to 160.80 thousand metric tons (mt) in Jul-23, the lowest volume shipped in the month of July since 2019. This is a 16.57% month-on-month (MoM) decrease and a 3.88% year-on-year (YoY) decline. The drop is attributed to reduced prices for beef. The average meat export value for Jul-23 reached USD 4,740.31/mt, the lowest since Mar-21. This represents a 6.21% MoM decrease and a significant 27.62% YoY drop. Cepea attributes these negative market trends to global economic conditions, including high inflation, increasing interest rates, and heightened food production in certain countries, directly impacting Brazil's beef export sector. Brazilian beef producers are striving to maintain competitiveness amid these challenges. The outlook for the coming months remains uncertain, depending on the global economic trajectory and potential measures to address the current challenges.

The Cañuelas Agricultural Market in Argentina witnessed a robust recovery in cattle prices towards the end of Jul-23. This was a much-awaited relief for ranchers facing modest increases relative to inflation over the past year. While this rebound is underway, further price adjustments are necessary to match the inflation benchmark fully. Correspondingly, Argentina's exported beef meat prices are increasing, with cuts like Garrón and Brazuelo experiencing a 13% MoM rise to USD 4,500/mt. The composite cuts from cows, valued at USD 4,200/mt, registered a similar percentage improvement. Nonetheless, these prices remain relatively modest, especially for Argentine exporters dealing with the "meat dollar," pegged at USD 0.90. This is due to 9% export duties deducted from the wholesale currency value. Raw material value recovery, exporter stock-building pressures, and seasonal supply reduction compound this scenario. As exporters aim to navigate potential currency shifts, this price repositioning offers a respite for breeders, particularly evident in the 90% YoY surge for cows at the Cañuelas Market.

Mexico's bovine meat exports to the United States (US) amounted to 157.83 thousand mt as of W30. This is an 11% decline compared to the same period in 2022 but Mexico maintained its position as the second most significant supplier to the US. Mexico witnessed reduced purchases of bovine meat over the period, although the total US bovine meat imports grew by 4% to reach 708.47 thousand mt. Canada, the primary bovine beef source for the US, experienced a slight 1% increase in dependency, providing 190.09 thousand mt. New Zealand, ranking third, registered a substantial 28% surge in supplies with 111.04 thousand mt. Conversely, other sources like Australia, Argentina, Brazil, Costa Rica, Ireland, and Nicaragua faced declines in their shipments, ranging from 15% to 64%.

Lastly, US beef exports to Mexico reached 40.01 thousand mt until W29, an 18% increase, and the fourth most significant destination. The Mexican market was among the few that increased US beef purchases, leading to a 1% decrease in total US shipments globally at 465.44 thousand mt. Notably, South Korea, Japan, and China registered reductions in US beef imports, with contractions of 18%, 19%, and 14%, respectively.