With Brazil getting the product certified before the 4 September beef export suspension to China accepted this week, a major product overhang is removed from world beef markets.

Brazil exports 20% of all beef that is traded in global markets and China is a buyer for 20%. In round numbers, China bought half its imported supplies from Brazil and Brazil exported half its total exports to China.

It is a relationship that was built over recent years and has prevented Brazil, traditionally the world’s cheapest beef producer from oversupplying global markets.

Global trends

Beef and sheepmeat prices across the world have surged this year, not just in Ireland.

The area for demand growth is confined to Asia as beef and sheep markets in Europe North and South America, Australia and New Zealand have at best plateaued if not showing a small decline

Alongside this the major global processors have also been posting large increases in profits as global societies began the process of reopening after COVID-19. Notwithstanding the uncertainty caused by the increasing numbers in Europe, there is an expectation that the beef and indeed sheep meat sector should continue to be firm into 2022.

The area for demand growth is confined to Asia as beef and sheep markets in Europe North and South America, Australia and New Zealand have at best plateaued if not showing a small decline.

The other variable is production and the indications are that while numbers are on the increase again it will be late 2022 or early 2023 when Australia climbs above 1m tonnes of beef exported again. By the middle of this decade, however, they will be back to at least 1m tonnes if not beyond that.

US particularly active with exports

US beef exports have increased substantially this year and the most recent indications from the US Meat Exporters Federation is that they will set a new record for volume and value in 2021. The ending of the trade dispute with China coinciding with the beef exports suspension from Brazil has created a wonderful opportunity for the US to establish its presence in that market.

Argentina is wrestling with inflation

In South America, Brazil is banking on the Chinese market reopening again soon for full resumption of exports. Cattle numbers look like they will reduce this year but overall, the industry plans to expand, increasing the annual cattle slaughter by a further 10m head by 2030.

Argentina is wrestling with inflation and a strong government desire to curb exports of beef, a dietary staple in Argentina. A temporary ban was introduced in 2021 and currently several in the government area advocating for a tax on beef exports.

Strong prices across the world

The good news for Irish farmers is that beef prices in Australia are above €5/kg and above €4/kg in the US. With that level of pricing in the third and second largest beef exporters, there will be no volume of cheap beef to trade globally in the near future.

The bad news is that farmers cost of production is increasing at an alarming rate as is the cost of consumer goods. As well as eating into margin, there is also the risk that consumers will be faced with prioritising expenditure over the coming weeks and months and there is always a risk that beef and lamb sales could loose out to less expensive proteins. In the longer term, it is difficult to see how the UK trade deals with Australia and New Zealand will not have a negative effect on Irish farm prices.

As Peter McCann reports in this week's Irish Farmers Journal, this point was made by the UK’s International Trade Secretary Anne-Marie Trevelyan at a Westminster Trade Committee meeting this week. She said that “we import just over 300,000t of beef at the moment, of which 98% comes from the EU and 78% of that is from Ireland,” and therefore “what we are looking at here is a potential displacement issue”.

Some relief for UK farmers maybe but a reminder to Irish farmers how vulnerable we are in the longer term even if all is well at the moment.