W30: Beef Update

In W30 in the beef landscape, the average value of the Mercosur steer remained stable at USD 3.37/kilogram (kg) carcass, with differing trends in different countries. In Brazil, the average value in the main exporting states increased by USD 0.03 to USD 3.11/kg carcass due to exchange rate appreciation. In Argentina, the heavy steer for export registered a USD 0.02 increase to USD 3.79/kg carcass, considering the official exchange rate and the 9% tax on meat exports. However, in Uruguay, peak prices from W29 were left behind, and special steers did not exceed USD 3.70/kg. Meanwhile, in Paraguay, the male to-slaughter remained stable at USD 3.50/kg during the week.

In the first half of 2023, Argentina's meat-packing industry registered increased beef exports. On the contrary, Brazil, Uruguay, and Paraguay experienced declines in the volume shipped. Argentine beef shipments reached 327.2 thousand metric tons (mt), an increase of 9% year-on-year (YoY). This is attributed to higher tasks resulting from the dry season, leading to increased beef supply in the domestic and export markets. However, globally, the four countries exported 1.54 million metric tons (mmt) during the first semester, 5% less than in the same period in 2022. The average price-per-ton decreased by 27.5% from Jan-23 to Jun-23. Brazil's sales to China slowed, leading to a position loss in the export market. Uruguay and Paraguay also faced lower volumes and prices. The Argentine beef industry is still adjusting to increasing operating costs despite absorbing the surplus beef through increased domestic and export demand.

The Foreign Trade Secretariat (Secex) reports that Brazilian fresh beef exports in the first 15 working days of Jul-23 reached 117.6 thousand mt, with an average daily flow of 7.84 thousand mt. This reflects a 14.6% month-on-month (MoM) decrease and a 1.5% decline compared to the average volume of Jul-22. The average price-per-ton declined to USD 4,755.4, a 5.9% MoM drop and a 27.4% YoY decrease. S&P Global Commodity Insights raised concerns over the slow negotiations with China, as the country recently released Brazilian meat held in Chinese ports after confirming an atypical case of mad cow disease in Pará in Feb-23. Brazilian meatpacking industries anticipate that business with Chinese buyers will return to normal at the end of Aug-23. Agrifatto projects that the total shipments for Jul-23 will remain around 160 thousand mt. This is despite the daily average shipped in W3 of Jul-23 was approximately 10% higher than in W1 of Jul-23.

Lastly, according to the United States Department of Agriculture (USDA), United States (US) beef cattle totaled 29.4 million heads on July 1, a decrease of 2.6% YoY and the smallest beef cattle herd since 1971. The drought significantly impacted herds, reducing pastures available for grazing and prompting ranchers to send cattle to slaughter. This tight supply is expected to increase the processing cost for meat processors, who will compete with each other for the limited number of cattle. Moreover, longer-term plans to open new slaughterhouses indicate that the cattle competition will continue until producers begin rebuilding their herds, which may take several years. Additionally, the USDA reports that producers kept 1.68 million beef cattle on pasture in Jun-23, a 3% YoY increase. This indicates that dry weather conditions led to pasture shortage, and producers are opting to keep cattle in barns.