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03

2023

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07

International Beef Market Outlook in July

Source:

OIG+X

Due to seasonal trends, beef prices in the EU continue to decline, but they remain higher than the levels in 2022. Meanwhile, despite a significant increase in exports in May and June, Brazilian beef prices are experiencing a downward recovery due to an increase in live cattle supply. The strengthening of the local currency, the Brazilian Real, may partially suppress exports and create greater pressure on the domestic market due to increased production. In the US, prices continue to reach new highs due to strong demand and expectations of continued declining production.


Due to seasonal trends, beef prices in the EU continue to decline, but they remain higher than the levels in 2022. Meanwhile, despite a significant increase in exports in May and June, Brazilian beef prices are experiencing a downward recovery due to an increase in live cattle supply. The strengthening of the local currency, the Brazilian Real, may partially suppress exports and create greater pressure on the domestic market due to increased production. In the US, prices continue to reach new highs due to strong demand and expectations of continued declining production.

 

-Brazil

Wholesale beef prices in Brazil continued to decline in early June, reaching the lowest level since 2021. The prices have slightly recovered afterwards, but this is mainly due to the appreciation of the Brazilian Real against the US Dollar. Reports indicate that the increased supply of live cattle has led to the price decrease. According to the latest data from the Brazilian Geographic Institute, Brazil slaughtered 7.3 million head of cattle in Q1 2023, with a total weight of 1.9 million tons. This represents a 4.8% increase in slaughter volume and a 3.0% increase in slaughter weight compared to the previous year. These figures demonstrate the continuous YoY growth in Brazilian beef production for the sixth consecutive quarter.

 

On the other hand, after the temporary export suspension to China and other destinations was lifted, export volumes have significantly recovered, with export prices increasing by 5% in May, reaching a six-month high. This has limited the decline in domestic prices, as more production is being exported to the international market. However, the appreciation of the Brazilian Real has harmed exporters, and there is still an upward risk, which could force more production to be sold in the domestic market, thereby putting downward pressure on prices.

 

In the coming months, prices are expected to remain relatively stable. Domestic demand in Brazil is still weak, while the supply is expected to remain sufficient.
 

-US:

Wholesale beef prices in the US reached a new high in mid-June, significantly higher than the levels seen last year. Strong demand during the barbecue season, coupled with tight live cattle supply due to factors like drought, has driven the price increase. According to the latest forecast from the US Department of Agriculture, total beef imports in 2023 are projected to reach 1.5876 million tons, the highest level since 2005, and imports are expected to further increase to 1.6148 million tons in 2024. The main reason for the import growth is the significant decrease in the inventory of live cattle, leading to a substantial decline in beef production this year.

 

Due to ongoing supply constraints and robust demand, prices are expected to continue rising in the coming months. However, lower feed costs may impose some limits on the price increases.
 

-EU

According to the latest data from the European Commission, the beef price index in the EU has reached its lowest level in nearly eight months. In the week starting from June 12, 2023, the trading price for adult bulls was 4.95 euros/kg (39.3 yuan/kg). Compared to the previous month, the price decreased by 1.9%, and it dropped by 13% compared to the beginning of the year. However, when compared to the same period last year, the price still increased by 1.8%.

 

The current price decline is primarily influenced by seasonal factors as the demand is lower during this time of the year. However, Germany is the main contributor to the cumulative decline since the beginning of the year, with prices dropping by 14%. In contrast, prices in France and Italy only decreased by 1%, prices in Spain remained relatively stable, and prices in Ireland increased by 0.9%.

 

It is expected that beef prices in the EU will remain relatively high throughout the year 2023, mainly due to a decrease in domestic production within the EU. According to the European Commission's beef market report in May, the beef production in the EU-27 countries declined by 2.6% YoY in the first two months. This decline is primarily driven by decreased production in Spain and Italy. As of now, the average price in the EU-27 countries is still 7% higher than in 2022, and considering the already high average price in 2022 itself, this indicates a significant increase. The only mitigating factor for the price increase is a structural decline in demand in some major countries, such as Germany, where the average level of beef consumption continues to decrease.