W37: Beef Update

In W37 in the beef landscape, the Hilton-suitable steer price continued to decline in Paraguay, dropping by USD 0.05 week-on-week (WoW) to USD 2.85 per kilogram (kg). This was the fifth consecutive weekly decrease, totaling USD 0.70 over the period. This drop is attributed to subdued external business opportunities, causing domestic livestock farmers to express dissatisfaction with the ongoing downward trend. In contrast, the Uruguayan steer price was quoted at USD 3.29/kg in W37, after a drop of USD 0.10, reflecting reduced livestock purchasing pressure. Argentine steer traded at USD 4.28/kg, falling by USD 0.08 WoW, driven by a weekly drop of USD 30/kg in meatpackers' offers, despite the stable exchange rate. The Brazilian steer price steadied at USD 2.73/kg, with a slight increase in its real value offset by weekly devaluation, shifting the exchange rate from 4.93 to 4.97 per dollar.

Tridge’s analysis indicates that the Brazilian beef export price stood at USD 4.51/kg in Aug-23, a 5% month-on-month (MoM) drop, a significant 26% year-on-year (YoY) decrease, and the lowest level since Jan-21. This price decrease was primarily driven by falling prices in China, Brazil's largest export destination. Beef export prices to China averaged USD 4.46/kg in Aug-23, a 7% MoM drop and a 33% YoY decrease, the most significant decline among the top ten export destinations. In contrast, Brazilian beef export prices to the United States (US) increased by 8% YoY. While Brazilian beef export prices are expected to continue declining, they are already below their five-year average, indicating limited room for further decreases.

Brazilian beef export volume to China decreased by 12% YoY to 114 thousand metric tons (mt) in Aug-23, accounting for nearly half of Brazil's total export losses during the month. The declining beef export value and volume suggest a diminishing demand for Brazilian beef in China due to a weak Chinese yuan, increased domestic beef production, and the country’s preference for low-priced imports. The Brazilian real's strengthening against the Chinese yuan further contributed to this downward trend. As other countries offer high prices or face low price declines, they gain a large share of China's beef imports. China's increasing beef production is also reducing the need for imports.

Chile’s beef production has declined steadily since its peak in 2020, with a 16% drop in both production volume and cattle slaughter numbers by Jun-23. Chile's domestic beef production reached 93 thousand mt in the first half of 2023, a 2.3% decrease compared to the same period in 2022. This decline can be attributed to sluggish demand due to high livestock prices and a shift towards imports, particularly from Paraguay and Brazil. While some experts argue that the decrease is due to reduced cattle slaughter, others point to declining demand as the primary driver. Chile's economic conditions, high inflation, and rising prices incentivized consumers to choose cheap foreign meat. This shift in consumer preference, combined with global economic factors, led to a decline in domestic beef consumption.

Lastly, the United States Department of Agriculture (USDA) expects India’s beef production to reach 4.56 million metric tons (mmt) carcass weight (cwt) in 2024. This follows a projected beef production of 4.44 mmt cwt in 2023. The USDA expects India to slaughter 40.70 million cattle in 2024, an increase compared to the 39.97 million estimate for 2023. Beef exports from India are forecasted to reach 1.5 mmt in 2024, a surge from the 1.47 mmt expected for 2023. Domestic beef consumption is estimated to reach 3.06 mmt in 2024, with 2.96 mmt anticipated for 2023.