W45: Beef Update
In W45 in the beef landscape, the United States Department of Agriculture (USDA) expects global beef exports to reach 11.9 million metric tons (mmt) in 2024, an increase of 1.5% year-on-year (YoY). Brazil is set to lead with 2.85 mmt, a 3.6% growth from 2023. Argentina’s beef exports are projected to grow by 7% YoY to 900 thousand metric tons (mt). Uruguay's exports are predicted to rise to 467 thousand mt (+3.8% YoY), and Paraguay is expected to export 445 thousand mt (+2.2% YoY) in 2024. Collectively, Mercosur countries are anticipated to export around 4.66 mmt, accounting for 39% of the global beef trade. Australia is forecasted to ship 1.6 mmt in 2024, a rise of 4.5% YoY, while New Zealand is expected to maintain its current export level of 670 thousand mt. The United States (US) is expected to experience a 6% YoY decline in shipments to 1.29 mmt in 2024, 20% less than in 2022 due to lower livestock supply and record domestic prices. The European Union (EU) is expected to see a 3.3% YoY decline in beef exports in 2024.
China is anticipated to decrease its beef purchases to 3.5 mmt (-2.8% YoY), while the US is expected to increase imports to 1.66 mmt (+1% YoY) in 2024. The weighted average free-on-board (FOB) price for key countries declined to USD 5,860/mt in Sep-23, a drop of 21% compared to the peak in Jun-22. Recovery in meat prices is not expected until well into 2024 due to ample supply, weakening currencies, accumulated stocks, and price-sensitive global beef demand. The ongoing conflicts in Ukraine and Gaza contribute to importer caution in the current market scenario.
The EU faces challenges in beef production due to restricted grass growth and heightened feed costs towards the end of 2023 and into 2024. The Agriculture and Horticulture Development Board (AHDB) anticipates a 3.1% YoY decrease in beef production for 2023, with an additional 1% drop forecasted for 2024. Concurrently, per capita beef consumption is expected to decline by approximately 3.5% YoY in 2023, reaching around 10 kilograms (kg), with a further 1% reduction projected in 2024. The EU beef trade is poised for a negative impact as high domestic prices may reduce the competitiveness of exports, particularly in global markets such as Japan and the US. With declining beef imports and elevated domestic prices in 2023, the EU is anticipated to become an appealing market for imports in 2024, with a projected growth of 5% YoY.
Tridge's analysis reveals that Brazil's in natura beef exports in Oct-23 amounted to 186.17 thousand mt, valued at USD 855.76 million. This represents a 4.5% month-on-month (MoM) and a 1.2% YoY decrease in volume and a 3.3% MoM and a 22% YoY drop in value. Notably, this decline occurred at the slowest pace in four months. The average export price in Oct-23 was USD 4.60/kg, a 21% YoY decrease. Exports to China, Brazil's primary destination, experienced an 8% YoY volume decrease and a 31% YoY decline in value. Brazil managed to offset losses in China by increasing exports to the US, with YoY gains of 33% in volume and 29% in value, even after fulfilling the zero tariff quota. Year-to-date (YTD) beef exports totaled 1.61 mmt, valued at USD 7.68 billion, a 4.8% YoY decrease in volume and a 25% YoY dip in value. The average export price stands at USD 4.77/kg so far in 2023, a 21% YoY decrease. While historical trends suggest a potential downside, prices are not expected to fall significantly below this threshold due to limited upside from ongoing global production growth. Consequently, prices are predicted to remain mostly flat in the upcoming months.
Lastly, the export price of Uruguayan beef hit a low of USD 3,993/mt in Oct-23, the lowest point in 2023 following five consecutive monthly declines. This signifies a notable 15.4% decline compared to the USD 4,721/mt in May-23. This price decline is causing concern in export sectors that are already grappling with the loss of competitiveness for Uruguayan products in global markets. The Average Export Income (IMEx) for beef in 2023 is currently USD 4,270/mt, a 16% drop compared to the same period in 2022 when it stood at USD 5,074/mt. This decline aligns with a visible deterioration in the country's exports, particularly impacting the rural sector due to factors like drought and reduced demand from China, the primary buyer of Uruguayan beef. According to the Economic Commission for Latin America and the Caribbean (ECLAC), Uruguay's exports are anticipated to experience a 20% decrease in 2023 compared to 2022. The country is expected to face challenges, with a projected 4% YoY drop in prices, a 17% YoY decrease in volume, and a 20% YoY decline in the value of Uruguayan placements.