Brazil surges ahead in global beef exports
- 2020 has proven to be a tough year for global markets due to Covid-19 causing a significant impact on the supply and demand for beef around the world.
- Despite these challenges, Brazil has managed to experience an increase in beef exports mainly due to a softening exchange rate that has resulted in higher domestic prices and an advantageous export scenario.
- The country is on track to reach a new global record for beef exports this year largely thanks to China who continues to deal with a protein deficit caused by African swine fever (ASF) and the increasing purchasing power of the Chinese middle class.
- Brazilian beef exports to China as of August 1st were up 145 percent compared to year-ago levels. These exports account for 48 percent of all Brazilian beef exports.
- Other key export markets include Saudi Arabia, the Philippines and Singapore.
- Another major export market for Brazilian beef is the U.S.
- So far this year, the U.S. has imported 10,000 metric tons swt (shipping weight) of mostly processed beef from Brazil.
- According to the USDA, Brazil’s beef exports could surpass 2.5 million metric tons carcass weight equivalent (cwe), accounting for 24 percent of global beef exports. 2021 projections show that Brazilian beef exports could rise another 8 percent to 2.7 million metric tons cwe.
- Brazilian cattle producers receive approximately $1.1 billion (U.S. dollars) to aid in pasture improvement, crossbreeding programs using imported cattle genetics, the acquisition of high quality seed stock and the increasing use of reproductive technologies.
- Feedlots in Brazil only account for 10 percent of Brazil’s meat production, however, this number is expected to double over the next five years.
- With increased feedlot production, Brazil may be able to challenge Australia and the U.S. in grain fed beef export markets.
The nation’s cattle herd is shrinking
- According to CattleFax CEO, Randy Blach, the U.S. cattle herd is quickly shrinking.
- During the Cattle Raiser Virtual Conference, Blach stated that last year numbers were down 350,000 hd. and he expects the same decrease this year due to drought and lack of profitability in the cow-calf sector.
- He expects cow-calf numbers to decline by one million hd. in the next two years, compared to two years ago.
- Blach feels that the cattle industry needs more harvest capacity so more profitability will flow back through the industry. Without increased capacity, the industry will remain vulnerable in the area of processing.
Farm Bureau report examines cattle market volatility, policy changes
- The American Farm Bureau Federation has released a report that examines cattle market volatility highlighted by the Tyson plant fire in Holcomb, KS and the Covid-19 pandemic. The report also describes policy changes at the state and county levels of the organization for 2021.
- A working group that consisted of ten state farm bureau presidents created the report.
- Fundamental topics included in the report;
- Mandatory minimum negotiated trade;
- The working group discussed “triggered”-style mandatory minimum pricing that would be set on a region-by-region basis.
- Risk management and education;
- The working group would like to see AFBF work with the Chicago Mercantile Exchange to better address concerns from smaller producers.
- Small capacity meat packing;
- The working group reviewed policy solutions that would allow smaller packing facilities to play a larger role in the food supply chain.
- Farm Bureau supports strengthening the Grain Inspection, Packers and Stockyards Administration’s ability to enforce market rules.
- Mandatory minimum negotiated trade;
Boxed beef prices
- Choice boxed beef: $217.72 (-1.62)
- Select boxed beef: $206.42 (-0.56)