October 2, 2023
Brazil's beef production surges 7% in first half of 2023, set to continue growth
The beef production sector in Brazil has witnessed a remarkable 7% year-on-year growth during the first half of 2023, reaching a total output of 4.1 million tonnes, UK Agriculture and Horticulture Development Board reported.
This is attributed to the increased availability of cattle for slaughter, with a total of 15.7 million head slaughtered in the first half of 2023, marking a substantial increase of 1.4 million from the previous year, Improved feed availability has resulted in lower feed costs, contributing to healthier profit margins for the cattle industry.
According to forecasts by the US Department of Agriculture (USDA), this growth trend is expected to persist, with an anticipated 8% increase in production levels for the entirety of 2023, followed by an additional 2% growth in 2024. This upward trajectory opens up expanded opportunities for beef exports, particularly to the lucrative Chinese market.
The USDA's predictions also suggest that Brazil's major competitors in the global beef market, including the United States, the European Union, and Argentina, are expected to experience a slowdown in their production rates, further enhancing Brazil's prospects for beef production.
The combination of lower domestic prices and improved economic conditions, coupled with the increased availability of beef, has led to a rise in domestic consumption within Brazil. However, this consumption trend may face challenges if the country's economic situation undergoes significant changes, potentially prompting consumers to opt for more affordable protein sources like poultry and pork.
Steer prices in Brazil, based on the deadweight metric, experienced a gradual decline throughout 2023, mirroring the growth in domestic production. As of the latest available data (as of September 22), there has been a slight price rebound, with prices reaching US$3 per kg, up from a low of US$2.70. Meanwhile, the US has witnessed a contrasting price trend, with prices surging to US$6.40 per kg due to lower available supplies.
Despite the slight dip in export volumes, Brazil's beef exports remain highly competitive on a global scale. Exports from January to August of 2023 totalled 1.23 million tonnes, representing a 5% decrease compared to the same period in the previous year. China continues to be the paramount trading partner for Brazil, accounting for 59% of its total export volume.
This strong reliance on the Chinese market has grown significantly, rising from 23% in 2019 to a peak of 60% in 2022, despite various challenges faced by Brazilian beef exporters in China, such as fluctuating consumer demand and trade disruptions due to cases of bovine spongiform encephalopathy (BSE).
Notably, Brazil is actively exploring opportunities to diversify its beef export destinations. Industry sources indicate that the country is eyeing new markets in countries like Indonesia, Thailand, and Singapore.
In contrast to its robust export sector, Brazil's beef imports remain relatively limited, primarily due to the vast size of its domestic market and industry. Year-to-date imports for 2023 have reached 29,000 tonnes, with the majority originating from neighbouring countries like Paraguay, Argentina, and Uruguay.
The surge in beef production in Brazil is not expected to have a direct impact on the UK. The UK's beef imports from Brazil for the first seven months of the year stood at 13,700 tonnes, primarily consisting of corned beef. In comparison, the UK's largest trading partner for beef imports is Ireland, accounting for 109,000 tonnes. Any disruptions in Brazil's trade dynamics, such as additional cases of BSE, could potentially reshape the international beef market. In the event of limited access to the Chinese market, surplus Brazilian beef stocks may seek new export destinations worldwide.
- UK Agriculture and Horticulture Development Board