World beef market: exports and production are declining, prices will continue to rise

Rabobank has published the results of a study for the 3rd quarter of 2021 on the price situation in the global beef market. According to analysts, the precarious balance was broken by the Argentine government's ban on the export of beef from the country. Restrictions will be in effect for 30 days

Cattle prices in the top beef exporting countries continued to rise or remain stable until Q2 2021. However, Argentina and Canada were the exceptions, with rather sharp declines in cattle prices, while cattle prices in Brazil reversed their upward trend.

In June, the Argentine government announced it would limit beef exports and increase domestic supplies of meat. The measure comes after a 30-day suspension of beef supplies in May. The new quotas now limit Argentine beef exports to 50% of the average monthly export volume from July to December 2020.

Commenting on this, Angus Gidley-Bird, Senior Livestock Analyst at Rabobank, said:

"With Argentina being the fifth-largest beef exporter in 2020 and the second-largest supplier to China , this supply cut could have a significant impact on global beef trade."

The Argentine government plans to revise the timing of the export of livestock products. It is planned to extend them until December. An exception will be made only for China and Israel, the largest consumers of beef importers.

Specifically, on August 16, the Argentine government announced that it would allow Israel an additional quota of 3,500 metric tons per month.

Continuing, Gidley-Bird said: “But we think there is likely to be a 50% decline in export volumes compared to the corresponding month of the previous year across the board, with the exception of sales to China, which resumed in September, and quotas to certain countries. until December 2021. In this way, the basic needs of the manufacturing sector will be satisfied. There will also be an increase in the availability of beef in the domestic market, reducing exports by only 9.5% compared to 2020.”

Ultimately, from an international perspective, Argentina's limited exports are expected to favor neighboring South American markets such as Brazil and Uruguay.

Brazilian beef exports to China increased significantly in June and July. Brazilian exports in June (82,000 metric tons) increased by 22% compared to May, and in July they increased by another 11%, reaching 91,000 metric tons, the highest volume this year.

In the first half of 2021, beef exports from Uruguay to Argentina reached approximately 1,400 metric tons, the highest level in 10 years, according to the Uruguayan National Meat Institute (INAC).

Shipments from Uruguay to China also increased by 45% to around 146,000 metric tons, while shipments to Israel increased by 83.6% to 8,200 metric tons.

As you know, the government of Argentina will publish a plan to stimulate the manufacturing sector - to prevent short-term and medium-term reductions in livestock and production. However, the authors of the analytical report believe that beef production may decline by 4-5% this year.