Report 1623

The trade war announced and carried out by U.S. President Donald Trump began to shape—starting this week—a new scenario for international trade, from which beef will not remain immune. In fact, the entry into force of a 10% tariff increases by the U.S. on China prompted the Asian country to respond this Tuesday with a tariff hike on a range of agricultural products, which includes a 10% duty on U.S. pork and beef.

Although last week prices suggested they had reached a ceiling, chilled Hilton values remain strong. Market sources noted sales from Argentina at US$16,200/ton FOB over the past week, while a European importer said he could not obtain merchandise for less than US$16,500/ton.

Out of the nearly 700,000 tons (shipped weight) in quota that the United States grants at a 0% tariff for beef suppliers, by March 3 some 171,000 tons had been used, 25% of the total, according to information from U.S. Customs.

Demand from MENA countries was active last week. A Paraguayan exporter noted deals for tenderloin with and without side strap at US$9,800 and US$10,800/ton CFR. For inside (nalga), the market showed “slightly weaker” levels, closing around US$5,400/ton.

After 15 months of war, commercial and social activity in Israel is seeking a return to “normal,” which opens the door to greater dynamism in the consumption of beef and lamb. Kosher and halal slaughter consultant Felipe Kleiman spoke to radio Carve on Tuesday about the “potential” he sees for chilled beef from South America.

The financial difficulties facing various import market operators in Chile have led to a certain slowdown in finalizing new deals, although some players foresee a different tone beginning in March.

Despite firmness and rising prices in the other three countries of the region, Brazil’s large relative weight caused the average value of slaughter cattle to drop this week. The WBR Mercosur Steer Index fell by 4 cents to US$3.78 per kilo carcass weight, totaling a 10-cent decrease over the past three weeks.

Faced with food inflation and falling popularity of President Luiz Inácio Lula da Silva, the government considered restricting agricultural exports to contain rising food prices, according to Valor. However, after negative reactions, officials indicated to the private sector that the idea will not be implemented.

Brazil is the second largest beef producing country and the largest beef exporting country in the world. The USDA office in Brasilia expects decreased slaughter in 2025, due to the forecast start of the reversion of the cattle cycle. Producers are likely to begin holding cattle from the market in 2025, driving calf prices upwards. Record beef exports are forecasted for 2025.

The Parliamentary Front for Agriculture (FPA) decided, in a closed-door meeting last week, to distance itself from the Minister of Agriculture and Livestock, Carlos Fávaro. The president of the FPA, Congressman Pedro Lupion (PP-PR), stated that the sector now maintains priority dialogue with the Ministry of Hacienda.

The Scientific Commission of the World Organization for Animal Health (OIE) approved a request from Brazil and Bolivia for international recognition as areas free of foot-and-mouth disease without vaccination, reported the Mato Grosso Federation of Agriculture and Livestock (Famato), which is closely monitoring progress on that request.

Marfrig saw its net profit increase by 21,714.7%, from R$ 12 million in the fourth quarter of 2023 to R$ 2.58 billion in the same period of 2024. This variation is explained by the capital gain from the sale of South American assets to Minerva Foods, as well as improved performance in its South American operations and BRF. During the same comparison period, EBITDA grew by 37.1% to R$ 3.747 billion. Net revenue rose by 22.1%, totaling R$ 41.302 billion.

The first two days of Carnival week always see no market activity in Brazil. The latest fat cattle market data date from the end of last week, with reference prices continuing their downward adjustment. The average price for finished male (“boi gordo”), based on the Scot consultancy references with payment in 30 days and excluding Funrural tax, dropped by R$4.4 per @ over the week to R$292.3. That was paired with a 2.4% drop in the exchange rate.

Uruguayan beef exports to the United States continue to grow at a rapid pace. In February, according to Customs data based on export requests, 11,566 tons of frozen beef (shipped weight) were sent to that market, 56% more than in the same month of 2024 and the highest monthly volume since mid-2007, 18 years ago, when the US was the main customer of Uruguayan packers. It was later overtaken by Russia and, from the mid-last decade, by China.

Uruguay’s beef exports to European Union countries remained strong in February, bolstered by the chilled volume that will be part of the 481-quota in the second quarter of the year.

The chairman of Marfrig’s board, Marcos Molina, believes that Uruguay’s response to the new proposal to sell three units in the country to Minerva should arrive between March and April.

According to unofficial information shared by newspaper Cambio, the court dismissed the “mandatory insolvency proceeding” for Somicar and archived the request filed in Salto. Now, the Commission for the Promotion and Defense of Competition in the country’s capital will manage the file for the Salto-based slaughter plant. The information indicates that the next step will be the initiation of a “voluntary insolvency proceeding.”

The fat cattle market is overheated, with prices continuing a sharp climb. Although there is some disparity in different plants’ positions, the overall market is marked by demand notably outstripping supply, with several plants willing to pay 10-20 cents more per kilo carcass weight than last week.

Cattle slaughter contracted for the third consecutive week. INAC reported that as of March 1, 43,689 head of cattle were processed, nearly 2,000 fewer than the previous week, bringing the total decline to over 10,000 head in the past three weeks. Slaughter was 11% lower than in the same period of 2024.

The sheep meat market remains firm with sustained prices. The main bullish factor is the scarcity of supply. Lamb prices are paid around US$4.25-4.30 per kilo carcass weight, while adult sheep with carcasses under 24 kg are paid US$3.50-3.60.

During both a structural and temporary shortage of cattle —where ranchers find themselves in a good position and packers are losing money and struggling to secure enough animals for slaughter— the government has repealed, by decree, a 1973 regulation that prohibited the export of live cattle.

After several days of heavy rainfall and ahead of a short week due to Carnival holidays, prices of the best export steers showed a rebound. Last Friday, the last business day before this edition closed, British crossbreed steer prices increased by AR$100 per kilo on the hook, reaching AR$5,000-5,100.

Cattle prices continued a recovery path last week. Although packers quote US$3.60 per kg for common steers, there were several deals at US$3.70 per kg early this week and US$3.40 for fat cows, an intermediary told WBR.

“To the great farmers of the United States: get ready to start producing a large amount of agricultural products that will be sold INSIDE the United States. Tariffs will apply to foreign products on April 2. Have fun!” President Donald Trump wrote this Monday on his Truth social network.

Negotiated fed cattle decreased US$/cwt 3 the week ending Feb. 22 and feedlot margins decreased US$ 41 per head to an industry average of US$ 237.36 per head, according to the Sterling Beef Profit Tracker.

United States beef imports are expected to peak this year at about two million tons, before falling to around 1.36mt in 2029 as a result of herd rebuilding and higher production, the US Department of Agriculture’s Economic Research Service says in a forecast released late last week.

According to the latest Cold Storage Report report from the United States Department of Agriculture (USDA), the total amount of beef in cold storage for the month of January was 463.3M lbs. Boneless beef accounted for 424.4M lbs (92% of total) while beef cuts made up the other 38.9M lbs. Both the figures for the total amount of beef and boneless beef are equate to a 12-month high.

Last week, fed cattle sales in the north were at US$/cwt 197-199 while in the south mainly at $197 or US$ 2 lower than the prior week. Dressed sales were at US$/cwt 313 with a few up to US$ 315 also US$ 2 lower.

Compared to the last market test, US beef import prices were slightly higher, instances moderately higher. Trading was moderate. Imported supplies from Australia and New Zealand remained tight for nearby delivery.

Sergei Mitin, Vice Chairman of the Federation Council Committee on Agrarian, Food, and Environmental Management Policy, said that meat consumption in Russia totaled 83 kg per person in 2024, and the country still depends on beef imports while it can export poultry and pork.

According to the USDA Livestock and Products Semi-annual report, favorable pricing and weather conditions for New Zealand cattle farmers have resulted in a retention of finishing cattle on farms and less slaughter in 2024. Farm operations face challenges with continuing financial pressure such as high debt, increasing on-farm inflation, and declining farmgate margins.

China's customs authorities suspended beef imports from seven companies in Brazil, Argentina, Uruguay and Mongolia on Monday amid record imports last year that led to an oversupply and heavy losses at farms, Reuters reported.

After the United States announced tariffs on products imported from China, among other nations, the Asian country retaliated by raising import duties on U.S. agricultural and food products by 10% to 15%, according to Reuters.