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Trade4go
Jan 3rd, 2025
Original content
In Bolivia, beef prices have surged by 26% to 76% in major cities, reflecting broader inflationary pressures on staple foods like chicken and pork. The price hikes are due to increased seasonal demand, reduced production, and fuel transportation challenges exacerbated by Bolivia's ongoing macroeconomic crisis.
The country's dwindling gas production, foreign currency shortages, and inflation have strained household budgets, with the official price index rising 6% over four years. The government has responded with measures such as temporary export bans, state intervention in food production, and border controls to curb smuggling and ensure domestic supply. However, economic instability and public dissatisfaction remain prominent concerns.
China's Ministry of Commerce has initiated an investigation into beef imports from 2019 to mid-2024, citing oversupply, declining domestic prices, and concerns raised by local cattle and livestock groups. The investigation covers fresh, chilled, and frozen beef, accounting for 30.9% of the Chinese market in 2023. Imports have increased by nearly 65% since 2019, with Brazil, Argentina, and Australia as key suppliers. Brazil alone provided 42% of imports, with over 1 million metric tons (mmt) shipped in 2024, a 12.7% increase from the previous year.
Domestic beef prices in China have fallen 22% over two years, leading to financial losses for many local producers. Expected to conclude within eight months, the investigation may result in safeguards to protect China's beef industry, though current tariffs, including the 12% rate on Brazilian beef, remain unchanged.
The Brazilian government and exporters have emphasized that Brazilian beef complements China's production and adheres to high quality and safety standards. Both sides have pledged cooperation to ensure constructive dialogue and mutually beneficial solutions while maintaining normal trade flows during the investigation.
Paraguay's slaughter capacity is projected to increase by nearly 20% by 2025, driven by two new meat processing plants aimed at boosting exports. The Victoria unit began operations in mid-2024, while Frigorífico Los Lazos is set to launch in early 2025.
According to the president of Paraguay's National Animal Health and Quality Service (SENACSA), this expansion will enhance industry competitiveness, increasing demand for cattle. Despite the growth, Paraguay's cattle slaughter remains below production levels, with 2025 slaughter numbers expected to reach approximately 2.05 million heads, a 5% rise from 2024.
The Philippine government has opened its market to Argentine beef, alongside poultry and pork. With around USD 350 million in annual meat imports, the Philippines is Argentina's fourth-largest export destination in Southeast Asia. The agreement recognizes Argentina's control and certification system with the Philippines, facilitating the approval of Argentine establishments for exports.
The deal includes exporting beef with bone, offal, and fat and establishes a 15-day window for the market's official opening. This achievement follows extensive negotiations and inspections by Philippine delegations. In 2023, the Philippines imported over USD 1.75 billion in meat, and demand continues to rise, with imports increasing by 17% in the first ten months of 2024.
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Brazil's beef prices rose to USD 4.88 per kilogram (kg) in W52, reflecting a modest 0.68% increase from the previous week but a 5.34% decrease compared to the same period in 2023. The market showed limited movement at the close of W52, mainly due to reduced activity from market participants during the holiday season.
Furthermore, a gradual recovery in liquidity is anticipated for the first half of Jan-25, with stable purchasing conditions in regions such as São Paulo. However, external factors, particularly China's investigation into beef imports, could impact future price trends. The investigation, which could last at least eight months, responds to concerns over rising imports from Brazil and its potential adverse effects on local industries. While current sales are expected to continue normally, any shifts in Chinese demand or market conditions could influence Brazilian beef prices, potentially leading to supply dynamics and price stability fluctuations.
Australia's National Young Cattle Indicator rose to USD 2.29/kg in W52, reflecting a 2.69% week-on-week (WoW) increase and a 42.24% year-on-year (YoY) rise. Despite increased supply from herd rebuilding efforts, this growth highlights a notable market resilience.
In 2024, the cumulative figure of beef prices across key categories grew by 20% to 39%, driven by higher processor capacity and strong global demand. This performance suggests the market has adjusted to greater supply levels without significant price erosion. Some analysts anticipate upward price movement in 2025 based on favorable market fundamentals, while others suggest prices could stabilize or face headwinds depending on global demand and supply chain conditions. Future price trajectories will likely hinge on the balance between domestic production capacity, global economic conditions, and export demand.
In W52, the price for lean beef (92% to 94%) in the United States (US) decreased to USD 7.42/kg, reflecting a 0.67% WoW decrease. Despite this dip, the broader cattle market demonstrated remarkable resilience in 2024, with a 29.49% YoY increase in lean beef and record-high prices across all categories, including feeder cattle and cull cows.
The Chicago Mercantile Exchange (CME) Feeder Cattle Index maintained a tight trading range of USD 240 to USD 262 throughout the year, underscoring market strength despite challenges such as equity market disruptions and disease outbreaks. Limited supply, driven by a historically low beef cow inventory of 28.2 million heads in 2024, has bolstered price stability. Looking ahead, 2025 is expected to favor producers, with further reductions in feeder cattle supplies potentially driving higher prices, provided consumer demand for beef remains robust.
Argentina's average steer beef price reached USD 2.31/kg in W52, marking a 5% WoW increase and a 32.76% YoY rise. However, these price gains may face challenges due to a new safeguard investigation launched by China, Argentina's largest beef importer. Prompted by concerns from Chinese livestock associations, the investigation will assess whether the influx of imported beef has harmed local production by driving down prices.
Since nearly 74% of Argentina's beef exports are directed to China, the outcome of this investigation is critical. If China's authorities confirm damage to their domestic industry, they could raise tariffs, directly impacting Argentina's export revenues and potentially slowing down price increases. Given Argentina's heavy reliance on the Chinese market, any tariff hikes or trade restrictions could significantly disrupt the local beef sector, affecting export volumes and domestic pricing trends.
Bolivian authorities and industry stakeholders should implement targeted measures to stabilize beef prices, such as incentivizing domestic production through subsidies for fuel and feed or tax relief for producers. Strengthening transportation infrastructure and addressing fuel shortages will also improve market efficiency. Collaborative initiatives with producers to ensure a steady supply during peak demand periods can help reduce price volatility.
Brazilian exporters should proactively dialogue with Chinese authorities to address import concerns and avoid disruptions while emphasizing the complementary nature of Brazilian beef to China's market. Paraguay should capitalize on its expanded slaughter capacity by targeting high-demand markets and establishing long-term trade agreements. Ensuring adherence to international health and quality standards will enhance market access and competitiveness for both nations.
Sources: Tridge, Noticias Ao Minuto, Valor Agro, Agro Napló, Canal Rural, Bichos De Campo, Argentina Gov
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