Brazil’s beef exports set to increase, to China

Wednesday, 8 July 2020

Exports of fresh and frozen beef from Brazil have been strong in 2020, and are set to stay that way.

The USDA has been expecting production and exports to be higher in 2020. In its April outlook, Brazil’s beef production was forecast to increase by 1.1% to 10.3 million tonnes in 2020. Beef exports were forecast to increase by 8%, to 2.5 million tonnes (cwe), driven by continued demand from China and Hong Kong. Consumption was forecast to fall by 1%, although it may be that this is conservative.

Despite being the world’s largest exporter of beef, exports typically represent only 15-20% of Brazil’s production. Although, this share that has been increasing in recent years. A weaker currency means that volumes remain competitively priced on the global market, and cattle prices are among the cheapest in South America. However, changes in the domestic market can also have an important effect on volumes available for export.

There are reasons to believe that exports may increase by even more than forecast. As it has elsewhere, coronavirus has been causing problems in the processing sector, while some volumes of beef to China, in particular, have been subject to interruption. However, it’s possible that the supply side may weather the storm relatively well, but the same may not be true of domestic demand.

Recent reports indicate the scale of the economic toll that the pandemic has taken on the economy, with the loss of perhaps 1 million formal jobs. Although Brazilian beef remains competitive in global terms, locally it had already been getting ever more expensive. This was already depressing domestic demand and the coronavirus has only compounded the problem. Consumers cutting food expenses, favouring poultry or pork over beef, could significantly reduce domestic demand. Although there have been no shortages, food insecurity is now thought to be far more widespread. This is an acceleration of a longer-term trend and continues to lead ever more Brazilian beef to be consumed in China, rather than at home.

Duncan Wyatt

Lead Analyst - Red Meat

Sign up for regular updates

You can subscribe to receive Beef and Lamb market news straight to your inbox. Simply fill in your contact details on our online form.

Visit the Keep in touch page

More Beef market news

Topics:

Sectors:

Tags:

×