W14 Beef Update: EU Beef Industry to Face Production and Trade Challenges while Mercosur Region to Record Increased Exports in 2024

EU Beef Industry Expected to Face Production and Trade Drops in 2024

Beef production in the European Union (EU) is anticipated to decline by approximately 1% year-on-year (YoY) to 6.4 million metric tons (mmt) in 2024, continuing the downward trend observed over several years. This pessimistic projection is attributed to a sustained decrease in the cattle population. Factors contributing to this decline include rising production costs, regional drought challenges, the spread of the bluetongue virus, weak beef demand, and new stringent EU regulations. According to the United States Department of Agriculture (USDA), the introduction of new EU regulations under the Green Deal and animal welfare initiatives adds further uncertainty, with necessary investments potentially squeezing cattle farmers' profit margins.

Furthermore, beef trade within the EU is expected to weaken in 2024 compared to 2023, with EU beef imports projected to decrease by approximately 3% YoY to around 350 thousand metric tons (mt). This negative outlook is linked to anticipated lower demand, particularly from the catering industry, as consumers opt for more affordable protein sources, coupled with constrained supplies from the United Kingdom (UK), the primary supplier. Similarly, EU beef exports are forecasted to decline by almost 4% YoY to 600 thousand mt. However, the USDA suggests that Poland may continue to bolster its beef shipments to other EU member states and third countries, notably Turkey, where demand remains high.

Mercosur Region Expected to Record Increased Exports in 2024

Beef exports from the Mercosur region are projected to reach approximately 4.82 mmt of carcass weight in 2024, a 3.4% increase compared to 2023. This positive outlook is underpinned by the expansive beef production cycle in Brazil and the weakened domestic demand in Argentina, ensuring a larger exportable balance. The growth is expected to target alternative markets to China, where a moderate decline in trade flow is anticipated.

Brazil is expected to produce 9.4 mmt of beef in 2024, with an estimated 3.01 mmt slated for export, representing a 6% YoY increase. Although shipments to China, the primary destination, are expected to rise by 2% YoY, this growth rate is below the global increase due to sluggish demand. Meanwhile, Argentine beef exports are forecasted to grow by 5% YoY to 920 thousand mt in 2024, supported by subdued domestic demand despite an anticipated production decline caused by drought.

Uruguay's beef exports are anticipated to decrease by 2% YoY to 490 thousand mt in 2024 due to expected production declines resulting from forage reorganization and reduced cow slaughter. However, the greater weight of carcasses is expected to offset the decrease in slaughter partially. Similarly, Paraguay's beef shipments are projected to decline by 9% YoY to 400 thousand mt in 2024 due to reduced slaughter and meat production in the country's meat processing plants.

Mercosur Steer Index Dropped in W13

Faxcarne reveals that the Mercosur Steer Index experienced a decline in W13, averaging USD 3.09 per kilogram (kg), a USD 0.02 decrease compared to W12. Across Brazil's exporting states, the average price stood at USD 2.76/kg, a USD 0.04 decline attributed to the depreciation of the Brazilian real against the US dollar. Notably, in Campo Grande, the value of male cattle for slaughter averaged USD 2.80/kg, a loss of USD 0.03, while in Mato Grosso, it decreased by USD 0.04 to USD 2/kg. Conversely, the price of the special steer for slaughter in Uruguay remained stable at USD 3.68/kg. In Argentina, it saw a modest increase of USD 0.02, reaching USD 3.73/kg. Paraguay experienced a depreciation of USD 0.10, settling at USD 3.10/kg.