Cattle prices have taken off in Brazil over recent weeks, rising from a low base equivalent of €2.45/kg at the beginning of August to €3.30/kg this week.
Brazil’s factory throughput has increased by over three million head so far this year, but there has been a tightening of supplies in recent weeks.
Prices have levelled off in recent days at €3.30/kg and it will be worth watching to see if this is a pause or a more stable base price.
Brazil isn’t alone among South American countries with a rising beef price, as the World Beef Report (WBR) Mercosur steer index has increased to $3.58/kg, a 17-month high.
As Figure 1 shows, most of this increase has come over recent weeks.
01/08/2024 2.45
02/08/2024 2.45
05/08/2024 2.45
06/08/2024 2.45
07/08/2024 2.45
08/08/2024 2.45
09/08/2024 2.48
12/08/2024 2.48
8/13/2024 2.48
8/14/2024 2.48
8/15/2024 2.48
8/16/2024 2.48
8/19/2024 2.48
8/20/2024 2.50
8/21/2024 2.53
8/22/2024 2.53
8/23/2024 2.53
8/26/2024 2.53
8/27/2024 2.57
8/28/2024 2.57
8/29/2024 2.57
8/30/2024 2.57
02/09/2024 2.57
03/09/2024 2.59
04/09/2024 2.59
05/09/2024 2.64
06/09/2024 2.64
09/09/2024 2.64
10/09/2024 2.64
11/09/2024 2.64
12/09/2024 2.70
9/13/2024 2.75
9/16/2024 2.75
9/17/2024 2.75
9/18/2024 2.75
9/19/2024 2.75
9/20/2024 2.75
9/23/2024 2.75
9/24/2024 2.77
9/25/2024 2.81
9/26/2024 2.83
9/27/2024 2.86
9/30/2024 2.88
01/10/2024 2.91
02/10/2024 2.91
03/10/2024 2.94
04/10/2024 2.99
07/10/2024 2.99
08/10/2024 2.99
09/10/2024 3.02
10/10/2024 3.07
10/14/2024 3.21
10/15/2024 3.21
10/16/2024 3.21
10/17/2024 3.21
10/18/2024 3.30
10/21/2024 3.30
10/22/2024 3.30
These rising cattle prices have forced Brazilian exporters to revalue the value of the product they are exporting.
Looking at export values for September, Brazilian beef was averaging $4,410 (€4,120) per tonne across all markets.
This has only been topped one month so far this year, with the price having fallen as low as $4,300 (€4,020) per tonne as recently as July. Interestingly, the story of SIAL over last weekend was the fact that Chinese importers were out in force and appeared to be doing brisk business on the South American stands.
The World Beef Report correspondent reported that the prices paid for deals being concluded were generally trending upwards.
This comes as Chinese beef imports have slowed down over the past couple of months, although they remain ahead overall for 2024 year to date.
Perhaps the dip in import volumes has created a demand and could drive prices higher in the latter part of this year. Brazilian exporters will certainly need higher prices given that their cattle price has risen by so much.
Why Brazil matters
Irish farmers may be inclined to look at what happens in Brazil with little more than a passing interest. After all, their beef is at a different price point than ours, despite the recent increase, and they export to different markets.
Despite the fact that they don’t really compete directly with Ireland in export markets, the sheep volume of product that they sell on global markets means that they impact the overall beef trade.
Up to the end of September, Brazil has exported over two million tonnes of beef and by the year end, it is likely that figure will approach 2.5 million - a record.
This represents one quarter of all beef that is traded on global markets and if they had this product to sell without an anchor market (China), then it would be sufficient to flood the EU market with supply.
Worth more to Irish farmers
Ironically, while Irish exporters and farmers may bemoan the fact that Irish beef exports are closed out of China, the reality is that it would be much worse for Irish farmers if China stopped buying beef from Brazil instead of Ireland.
While Irish beef is getting this indirect benefit, the picture will likely improve further if the value of Brazil’s cattle continues to increase.
With farmgate prices in the US continuing in the region of €6/kg equivalent, it means that the number one and number three ranked beef exporters by volume won’t have any cheap beef to offload on global markets in the immediate future.