Analysis Cattle & Beef
Brazil benefits from beef shortage in the US
The Brazilian beef export reached a record level in September 2024. Due to the weak real, Brazil is clearly positioning itself stronger, while beef in the rest of the world is becoming more expensive partly due to tightness in the American market. Additionally, the country benefited from significantly higher exports to the United States, which imported more beef than in previous years.
Brazil exported 251,000 tons of beef in September, according to data from the Brazilian cattle sector association (ABIEC). This is a significant increase compared to the same month in 2023 when Brazil exported 195,000 tons. This represents a growth of 29%. Never before has the country exported so much beef in a single month.
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Brazil has been exporting significantly more beef throughout the year compared to last year. Interestingly, the increase compared to last year was lower this month than the average. In the first three quarters of the year, Brazil exported two million tons of beef. Last year, Brazil exported 1.42 million tons. In other words, exports increased by 41.2%. The strongest increase compared to the previous year occurred in April, with an export growth of 88.8%.
The reason why the increase in September compared to the previous year is relatively low compared to the rest of 2024 is because exports started to rise in the spring of 2023. In the first four months of that year, exports were still low. However, from May 2023, exports increased by 53% from 110,000 tons to 168,000 tons. From that point on, exports never dropped below 160,000 tons.
The value of beef exports in September increased to 1.13 billion reals (€185 million at current exchange rates). This is a 28.5% increase. In the same month of 2023, beef worth 884 million reals (€144 million) was exported. In the first three quarters, the total export value was 8.38 billion reals (€1.36 billion), a 22.7% increase compared to the previous year when beef worth 6.83 billion reals (€1.12 billion) was exported in the same period.
Weak American Market and Cheap Real
The tightness in the American market provided opportunities. Due to drought, the American livestock population has significantly decreased. As a result, the United States is exporting less beef. In September 2024, the United States exported 104,000 tons of beef. When the market was less affected by drought in 2022, the total export reached 125,000 tons. This led to price increases among Brazil's main competitors. Due to the tightness in the American beef market, prices in the United States have significantly risen. This also pushed the Australian prices up due to a significant growth in exports to both the United States and Asia. European beef has been more expensive than its direct competitors for the past two years due to more or less structural reasons.
On the other hand, Brazil managed to keep its prices relatively low because the real has significantly depreciated this year. The weak real made importing meat from the South American country much more attractive. At the time of writing (Tuesday, November 12), the value of the Brazilian currency was 18.8% lower than a year ago. This gives Brazil a clear advantage in the global market.
Diversification
Thanks to its favorable position, the country has successfully diversified its exports. In recent years, Brazil has been exporting the majority of its beef to China. This year was no different, but in practice, Brazil has become less dependent on exports to the Asian country. Brazil exported a total of 135,000 tons of beef to China. Brazil exports 53.8% of its beef to the Asian country. Last year, the dependence on China was much greater. In September 2023, Brazil exported 132,000 tons to China, accounting for 67.9% of the total Brazilian beef exports.
Similar to Australia, Brazil is taking over some of the United States' exports. For example, beef exports to Mexico grew by 471% to 4,964 tons. Like the United States, Mexico is facing drought, making it more dependent on imports. Although the United States exported more meat to the country, it was unable to meet the entire additional demand. As a result, Brazil was able to step in. Additionally, Brazil is clearly gaining market share in the Middle East. While the United States sees a decline in exports to the region, Brazil's exports are increasing. The difference is most noticeable in Egypt. US exports to the country decreased by 17.3% compared to the previous month, while Brazil exported 129% more than the previous year.
United States and Europe Import Significantly More
Furthermore, the American import of beef significantly increased. Besides Australia, Brazil is clearly benefiting from this trend. In September 2024, beef exports to the United States increased by 257% compared to the previous year. In total, Brazil exported 25,000 tons to the United States. The year before, Brazil only exported 7,000 tons to America.
With this increase, the United States has become the second largest Brazilian export market. In September 2023, America was in third place, and in the previous year, the United States was even the eighth importer in September. The European Union was the fourth largest export destination in September, with Brazilian exports to the EU increasing by 41.6% to 12,000 tons.
