The average value of Brazilian beef exported in January 2024 was $4,390 (€4,028) per tonne (t), down from $4,410t (€4,046t) the previous month and the lowest since January 2021 when the value was $4.350t (€3,391t). The value of Brazil’s beef exports peaked in June 2022 at $6,550t (€6,100t). Since then, the trend has been downwards according to ABIEC whose members account for 98% of Brazilian beef traded in international markets.

Half of Brazil’s beef exports go to China, with the market taking 1.2m tonnes in 2023 out of the record 2.3m tonnes of Brazilian beef exports.

While the rapidly growing demand from China for imported beef over the past decade enabled an equally rapid growth in Brazil’s beef exports over the same period, it has created a value problem over the past year.

A slowdown in the growth of the Chinese economy post COVID-19, and recovery in domestic pigmeat output following the African Swine Fever (ASF) decimation of the pig herd, combined to weaken the price China was willing to pay for beef imports even though volumes continued to increase marginally in 2023.

Australian impact

Further downward pressure on the value of beef exports to China came in the latter half of 2023 with the resurgence of beef exports from Australia, where the herd rebuild following drought was complete. Australia’s total beef exports last month were up 33% on February 2023 to almost 94,000 tonnes.

Exports to China were up 26% year on year to 15,757t, according to Meat and Livestock Australia figures.

While New Zealand sheep meat exports in January were up just 1% on January last year at 36,171t (MIANZ), export volumes from Australia surged to another new monthly record in February at 52,351t.

The upward trajectory also extends to dairy output in Australia with Boerenbusiness reporting a 5.2% increase in Australian milk supply in January 2024 to 727.6m litres while USDA forecast a small 1% increase in Australian volumes for 2024.

Northern hemisphere

The supply curve in the northern hemisphere is at best flat or in decline since the start of 2024.

US beef exports for January show a 1% decline in volume compared with January 2023, which was down on the record export volumes of 2022. The drought last year in the US reduced cattle supplies which helped drive prices there to the equivalent of €6/kg.

With international markets in Asia being supplied by Australia and Brazil where farm gate prices are half this value, US processors aren’t as enthusiastic about driving export volumes.

Interestingly, they have secured more value for beef in January 2024 with prices up 9% year on year, driven by demand from Japan in particular.

USDA are forecasting that milk production in the US will be 228.2bn pounds (100.4bn litres), up slightly on the 226.6bn pounds (99.7bn litres) in 2023.

In Europe, Eurostat data released last week reveals that cattle production in the EU is forecast to be down 1% in 2024 to 12.1m head and sheep production down a significant 7% to 15.6m head.

The most recent EU outlook forecast published in October 2023 forecast a 1% reduction in both beef and sheep meat production in 2024, with milk output forecast to increase by 0.2%.

An updated short term outlook forecast is expected to be published by the EU in the next few weeks.

In brief

  • Brazil beef export value was the equivalent of €4,028m in January.
  • This is the lowest since January 2021.
  • Half of Brazil’s beef exports go to China.
  • Australian beef exports were 33% higher year-on-year in February.
  • Australian milk output up 5% in January to 727.6m litres.
  • US beef export volumes are in decline.
  • EU cattle numbers forecast to fall 1% and sheep to fall 7% in second half of 2024.
  • Comment: Any drop in EU production will open door for imports

    Any drop in EU production opens the door

    for imports and in 2024 significant supplies of beef and sheep meat are available on international markets at exceptionally low prices.

    The UK will be an attractive market for both Australia and New Zealand given the generous tariff-free quotas, and this will increase competition for both Irish beef and sheep meat exports.

    Irish beef exports are unlikely to increase significantly in 2024 to either the US or Asian markets apart from China. Even there, competition from Brazil and Australia will make it particularly competitive.

    The slump in profits being experienced by New Zealand beef and sheep producers is the consequence of an oversupplied market that so far has excluded Europe.

    For dairy, global supply and demand appear in balance and there is cautious optimism in markets for the year ahead.

    New Zealand beef and sheep farm profits in freefall with 54% slump forecast for 2024

    This week’s mid-season update released by Beef+Lamb New Zealand (B+LNZ) has revised its farm profit forecast to a 54% drop compared with 2022-23. It had forecast a 31% drop in its annual outlook published last October.

    This means that farm profits for 2023-24 are forecast to be on average NZ$62,600 (€35,367) per farm, and follows a 29% drop in farm profits the previous year.

    This forecast projects the lowest level of farm profit since the financial crash of 2008.

    B+LNZ says that when adjusted for inflation, it leaves beef and sheep farm incomes comparable with the 1980s and early 1990s.

    B+LNZ define farm profit as what is left after paying direct production costs to cover “tax, personal drawings, principal repayments, capital expenditure and development of the farm.”

    Revenue for 2023 -24 is forecast to decline by 18% for sheep producers and 7% for cattle, while farm expenditure is projected to increase by 0.7%.

    Beef and sheep prices

    The main cause for the slump in beef and farming profits in New Zealand is farm gate prices not keeping up with rising input costs, particularly for lamb.

    Average cattle prices are 3% below the previous year at NZ$5.15/kg, which is the equivalent of €2.91/kg.

    This is exceptionally weak compared with European and US prices but 2% above the five-year average in New Zealand.