Brazil exported 196,000 tonnes of beef in August, 27% less year-on-year, due to the exhaustion of its quota in China and the suspension in the EU and Norway. The new US trimmings quota is unlikely to offset that volume.
Brazil exported 196,000 tonnes of beef in August, 27% less than a year earlier, posting its second double-digit monthly drop after more than three years of almost uninterrupted growth. The slowdown in China explains the decline: shipments to that destination went from a peak of 158,000 tonnes in June to 83,000 in July and barely 16,000 in August, so the Asian giant ceased to be the leading market and fell to fifth place.
The exhaustion of the Chinese quota, of 1.1 million tonnes, is estimated at a surplus of between 150,000 and 200,000 tonnes —the first estimate spoke of 150,000 tonnes— on which a 67% tariff will apply, to be absorbed by the importer, the exporter or a combination of both. The average price of the beef shipped to China in August was 5,700 dollars per tonne, below the 6,800 of June and 6,400 of July, and insufficient to cover that tariff.
With that gap, the United States moved into first place among destinations, with 31,000 tonnes in August versus 22,000 in June and 26,000 in July, although far from offsetting the loss in China. Russia also grew, from 6,000 and 11,000 tonnes in June and July to 21,000 in August, and Europe recorded 20,000 tonnes, after 7,000 and 10,000 in the two previous months, in a surge driven by anticipation of the suspension of the European market.
In the first eight months Brazil accumulated 1.9 million tonnes, 5% more year-on-year, and in the last twelve months 3.1 million, with a rise of 14%. The overall average price in August was 6,200 dollars per tonne, with declines of 200 dollars in July and August from the recent peak of 6,600 in June.
Since the beginning of September the suspension of Brazilian beef has been in force in the European Union and Norway. The bloc bases the measure on the lack of safety that, in its view, the traceability of the animals and of their treatments with growth promoters provides.
The European market is relevant not so much for volume as for value: while the average price of what was shipped to China and the United States during the year was 6,000 dollars per tonne, that destined for Europe reached 9,000 dollars. Thus, Brazil is left with the virtual impossibility of placing beef in China and Europe, which compromises its export position in the coming months.
The opening by the United States of a 300,000-tonne quota, at a rate of up to 100,000 per month between September and November, for countries without their own beef quota, appears to be a theoretically interesting opening for Brazil. However, the math is not linear: the exempt quota covers only lean chilled or frozen trimmings, whose customs code differs from the one Brazil mostly uses.
The 120,000 monthly tonnes that previously went to China have a different composition from what the new US quota requires. In addition, generating trimmings requires breaking down a great deal of beef, and the sharp reduction in business with China and Europe further limits that production. That is why the quota, as defined, is unlikely to meet the objective of containing the price of beef for hamburgers in the US market. Brazil will be able to resume operations with China from late October or November, working against the 2027 quota.
Australia shipped 128,000 tonnes in August, 5% less year-on-year, adding its second month of decline. China also weighed on the figures there: it went from an average of 27,000 tonnes per month in the first five months to 8,000 in July and 6,000 in August. South Korea also became more complicated due to the loss of the 5% preferential tariff, which rose to 25% when the free trade agreement quota ran out at the end of August. In eight months it accumulates 1.08 million tonnes, 9% more.
Uruguay shipped 42,000 tonnes carcass weight equivalent in August, 17% less year-on-year, with declines to China (6,000 tonnes less) and the European Union (3,000 less). In the eight-month accumulated total it adds up to 318,000 tonnes, 13% below last year.
The United States exported 65,000 tonnes in July, 7% less year-on-year, with declines in South Korea, Japan and Canada, and stability in Mexico. China showed a rebound of 2,000 tonnes, double year-on-year, after months of marginal placements. The average price in July was 10,600 dollars per tonne, 11% more than a year earlier.
