Brazil’s Beef Exports Boom in 2024 Due to Robust Global Demand and Increased Production Despite Lower Prices

According to the Ministry of Development, Industry, Commerce, and Services, Brazil recorded a significant surge in beef exports in Q1-24, with shipments of in-natura beef totaling 527.14 thousand metric tons (mt) valued at USD 2.39 billion, a 28.27% increase in volume and a 20.10% rise in value compared to Q1-23. Agromeat data indicates that Brazil's beef exports in Apr-24 reached 203 thousand mt by April 27, nearing the previous record of 203 thousand mt set in Dec-23. As a result, Apr-24's exports are poised to potentially surpass the monthly record, reaching around 220 thousand mt. If this robust export momentum persists, Tridge expects Brazil's beef in-natura exports to reach approximately 2.05 million metric tons (mmt) in 2024, a 2% growth compared to the 2023 level of 2.01 mmt.

Figure 1: Brazil’s Beef Export Volume and Price Trend from 2022 to 2024

The optimistic outlook for Brazil's beef exports is attributed to robust global demand, particularly from key markets like China and the United States (US). Brazil has seized this opportunity, leveraging challenges faced by competitor exporters such as the European Union (EU), where beef production is expected to decline due to herd shrinkage, impacting trade dynamics. The United States Department of Agriculture (USDA) indicates that Brazil is stepping in to replace US beef in certain Caribbean countries with a cheaper alternative in large volumes. The USDA also suggests that Brazil stands to gain further traction in Asian markets, especially if Australia redirects its focus to supplying other regions like the US.

Moreover, Brazil is actively diversifying its export destinations, a strategic move aimed at bolstering beef shipments. In 2023, Brazil successfully secured markets for its beef in Indonesia, Thailand, Mexico, the Dominican Republic, and Singapore, highlighting ongoing diversification efforts. Additionally, the Brazilian government is intensifying efforts to strengthen its presence in countries like Indonesia, Taiwan, and South Korea, where Brazilian beef currently holds a smaller market share.

It is also worth noting that Brazil proposed to Japan on May 3, 2024, to initially participate with a "small quota" of its beef market as a demonstration of product quality without disrupting existing interests. In return, Brazil would open its market to purchases of wagyu meat from Japan, granting access to the Japanese beef and pork market. Notably, the Japanese beef market is currently closed to Brazilian meat due to health issues, among other factors. Interestingly, Brazil's recent declaration of its entire territory as foot-and-mouth disease-free without vaccination and the cessation of immunization campaigns on May 2, 2024, paves the way for expanded market access. Once recognized by the World Organization for Animal Health (WOAH), Brazil can export its meat to countries with stringent health standards, including Japan and South Korea.

Another factor contributing to Brazil's positive beef export market outlook is the anticipation of sufficient exportable supplies, as beef production is projected to increase in 2024. According to the USDA, Brazil's beef production is expected to reach 11.36 mmt carcass weight equivalent (CWE) in 2024, a 3.84% increase from the 2023 level. This anticipated production growth is attributed to increased cattle slaughter numbers, driven by robust global demand for beef. The USDA forecasts Brazil's cattle slaughter to reach 46.15 million heads in 2024, a 3.92% year-on-year (YoY) increase. Notably, Brazil’s cow slaughter numbers have consistently increased since 2022, resulting in decreased inventory figures estimated at 192.57 million heads at the beginning of 2024, a 0.92% YoY decline. The USDA indicates that Brazil entered the bottom of the cattle cycle in 2023 and is expected to persist for the next 12 to 18 months, with producers liquidating previously held inventories.

The ongoing cattle liquidation cycle is poised to have future ramifications for the industry. With fewer cows, a decline in birth rates is anticipated, with the USDA projecting a 2.08% YoY drop to 47 million calf crops by the end of 2024. Consequently, reduced availability of animals in the replacement market is expected, potentially leading to price increases. As prices begin to improve for producers, replacement producers are likely to retain their calves, further diminishing the availability of animals for slaughter in the upcoming years.

Despite ample beef export opportunities in Brazil, the sector has experienced a decline in export prices per ton, averaging USD 4,530 in Apr-24. While this reflects a marginal 0.02% month-on-month (MoM) increase and has remained relatively stable since Aug-23, it marks a substantial 33.64% drop from the record high of USD 6,826.29/mt recorded in Jun-22. This decline in Brazil's beef export prices can be attributed to increased domestic production, intensifying competition among exporters for shipments. Nevertheless, lower export prices have enhanced the competitiveness of Brazilian beef in the global market, fostering increased shipments and market penetration.

On the domestic side, Tridge data indicates that wholesale prices of fresh whole beef in Pernambuco, Brazil, averaged USD 3.13 per kilogram (kg) in W18. Despite a 1.62% week-on-week (WoW) increase and a three-week consistent growth, this price has steadily dropped by 21.55% since the record high of USD 3.99/kg in mid-Apr-22. The decline in wholesale prices can be attributed to increased domestic market supply and the availability of affordable protein alternatives like poultry and pork that consumers opted for amid a sluggish economy. This trend underscores the close correlation between wholesale and export beef prices.

Figure 2: Fresh Whole Beef Wholesale Price Trend in Pernambuco, Brazil

Looking ahead, Brazil's beef exports are expected to thrive in 2024 and 2025, driven by robust demand, particularly from China, as they are expected to commence stock-taking for New Year 2025 in the second half of 2024. However, heightened beef production in Brazil may slow down in the second half of 2024 due to an anticipated decline in calf crops and an expected increase in replacement prices, potentially jeopardizing beef supply availability for exports in the coming years. Consequently, wholesale and export prices will likely rise in 2025 but are expected to stabilize for the remainder of 2024.