Weekly Product Updates

W40: Beef Update

Fresh Bone-In Beef
Published Oct 13, 2023

In W40 in the beef landscape, despite increased Argentine beef exports, the industry's profitability is facing significant challenges. China, a major importer of Argentine beef, is paying 30% less than in recent years, contributing to a complex economic environment characterized by inflation and exchange rate issues. This results in lower revenues and higher operating costs for meat processing plants, which are grappling with expensive electricity and inflation-driven adjustments to joint ventures. In addition, the value of the special dollar used for exports lags behind the domestic economic situation. To address these issues, the Argentine meat industry has sought a "meat dollar" solution similar to those implemented in the soybean industry, but so far, it has not materialized. A more competitive exchange rate could help offset price declines, and rising internal costs, and support the domestic market. However, the government's stance on the “meat dollar” remains unclear, leading to ongoing challenges in the industry.

Mexico experienced a notable surge in bovine meat imports during the first eight months of 2023, importing 127.16 thousand tons, a substantial 19.4% increase compared to the same period in 2022. The price per ton also saw an 8.1% increase from the previous year, reaching USD 7,574/ton. Mexico allocated a total budget of USD 963.1 million for these purchases, representing a 29.1% growth in interannual terms. Notably, the United States (US) remains Mexico's primary trading partner for beef imports, accounting for 70.8% of acquisitions, with a 20.1% increase compared to 2022, totaling 90.01 thousand tons. Followed by Canada, which experienced a 33.2% export growth to Mexico, reaching 18.12 thousand tons of beef.

Brazil successfully exported 125 in vitro-produced Brahman breed zebu embryos to Peru, marking a significant achievement that contributes to the genetic improvement and international trade in zebu cattle. These embryos were sent to the Instituto Nacional de Innovación Agraria (INIA), which will conduct research on genetic progress and distribute embryos to local breeders, thus enhancing the Peruvian cattle industry. The initiative is part of a government project promoting livestock development in Peru. The next objective is to open up the live animal market, and it is part of the broader Brazilian Cattle project aimed at disseminating zebu genetics globally.

Furthermore, preliminary data released by the foreign trade secretariat of Brazil reveals that beef exports in Sep-23 remained below 200 thousand tons, marking a 4.7% month-on-month (MoM) decrease and a 3.9% year-on-year (YoY) drop, with a total volume of 195.1 thousand tons shipped during Sep-23. Revenue reached just over USD 6.92 billion, a significant annual drop of 24.5%, while showing increase rates of 6% and 61.4% over the same periods in 2021 and 2019.

In São Paulo's cattle markets, prices remained stable, with a modest increase of USD 0.98 per arroba for "China cattle'' at the beginning of W40. Meanwhile, other categories of cattle destined for slaughter maintained their prices unchanged. The lower cattle supply and the upcoming salary payments in early Oct-23 led to price increases for all meat cuts in the São Paulo wholesale market. Additionally, the Sep-23 live cattle futures contract at B3 concluded on the last business day of September, settling at an average price of USD 4.43 per arroba, according to the Center for Advanced Studies on Applied Economics's (Cepea) indicator. The Scot Consultoria's live cattle indicator, based on B3's method, closed at USD 43.61 per arroba on September 29th. The average price for live cattle intended for the domestic market stood at USD 42.41 per arroba, tax-free. "China cattle'' averaged USD 44.67 per arroba.

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