W44: Beef Update

In W44 in the beef landscape, the United States Department of Agriculture (USDA) anticipates global meat exports to amount to 35.4 million metric tons (mmt) by the end of 2023, a 3% decrease from the 36.5 mmt recorded in 2022. This decline is primarily attributed to decreased beef and pork shipments. USDA projections indicate that 11.7 mmt of beef is expected to be exported in 2023, a decrease of 295 thousand metric tons (mt) compared to the 12 mmt in 2022. The primary beef exporters are expected to be Brazil, Australia, India, the United States (US), Argentina, New Zealand, the European Union (EU), Canada, Uruguay, and Paraguay.

Steer prices in Mercosur countries showed diverse trends in W44, with Argentine weighted and traced steer trading at USD 3.62 per kilogram (kg), an increase of USD 0.08 from W43. This uptick was attributed to a slightly improved animal supply and more favorable average offers, allowing companies to conduct consolidated purchases. Argentina's prices maintained a 12% lead over other Mercosur countries, with a maximum gap of only six points. Meanwhile, the price of fat steers remained steady at USD 3.19/kg in Brazil, with minimal fluctuations in both internal quotes and exchange rates. Despite this stability, Brazil continued its robust beef exports, with over 186 thousand mt shipped in Oct-23. However, export prices remained relatively low.

In Uruguay, the export-type steer's value dipped by USD 0.01 to USD 3.12/kg amid inconsistent demand in the market. Slaughter volumes reached 54 thousand mt in W43, a 7% rise compared to W42 and a notable 22% increase compared to the ten-week average. Oct-23 exports amounted to 33 thousand mt, continuing at a slow pace and representing a 25% year-on-year (YoY) drop. In Paraguay, the price of EU-eligible steers remained at USD 3.30/kg in W44, unchanged from W43. Paraguay’s steer demand primarily stemmed from business with Chile.

Tridge’s data analysis indicates that wholesale beef prices in Pernambuco, Brazil, stood at USD 3.19/kg in W43, a slight 0.63% week-on-week (WoW) increase. This marked the second consecutive weekly rise but still a significant 7.84% YoY decline. These prices consistently remained below 2022 levels, decreasing by 4.2% since W3 of Jan-23. These trends are predominantly attributed to increased production and decreased exports. In H1-2023, Brazil's beef production surged by 7% YoY to 4.1 mmt, driven by higher cattle availability for slaughter. However, Brazil's beef exports reached 1.42 mmt, valued at USD 6.8 billion from Jan-23 to Sep-23, a 5% YoY decrease in volume and a substantial 26% YoY decline in value. This drop can be linked to falling export prices, which averaged USD 4.8/kg during the first three quarters of 2023, a 22% YoY decrease. Reduced beef prices and improved economic conditions have elevated domestic consumption in Brazil. However, evolving economic factors may prompt consumers to shift towards more cost-efficient alternatives such as poultry and pork.

Lastly, Australian red meat exports reached 177.67 thousand mt in Oct-23, a 5% surge compared to Sep-23 and a 39% YoY growth. This marks the highest monthly export volume since Sep-19, with beef shipments leading. Australian beef exports totaled 105.13 thousand mt in Oct-23, a 7% month-on-month (MoM) rise and an impressive 44% YoY increase. The US was the primary destination for Australian beef, with exports increasing by 118% YoY to 31.58 thousand mt in Oct-23. This is a significant shift from 2022, when the US was Australia's fourth-largest export market, recording a two-decade low of 133.95 thousand mt for the year. China secured the second-largest spot for Oct-23 exports, increasing by 37% YoY to 19.68 thousand mt. So far, in 2023, Australia has exported 171.59 thousand mt of beef to mainland China, putting it on track to surpass the 196.35 thousand-tonne quota-free limit stipulated in the Australia-China free trade agreement (FTA) before year-end. This would trigger the quota safeguard, imposing additional tariffs on subsequent Australian exports.