Argentine Weather Break Could Mean Herd Rebuilding

After three years of dry weather, which challenged the Argentine beef cattle industry, the USDA’s Foreign Agriculture Service estimated this week that Argentine cattle slaughter and beef production will drop in 2023, in line with official USDA estimates.

The word came in a semi-annual report from the FAS office in Buenos Aires.

Argentina is important because it is the fifth largest beef exporter in the world, with 70% of its production being exported.

Argentina is in the third year of a La Niña weather pattern, which normally leads to dry conditions in most of the country, the FAS said.  Roughly half of Argentina’s pasture area is affected by drought with some areas reporting severe degradation in pasture conditions.




If weather conditions begin to normalize in March and April with the end of the La Nina climate pattern, pasture improvements could permit producers to retain more cattle, potentially leading to higher prices, the FAS said.

A reduction in beef output will be reduce domestic consumption and exports relative to 2022, the FAS said.  The new export estimate is 780,000 tonnes carcass weight equivalent, marginally more than the official USDA number, but 45,000 tonne less than in 2022.

China was expected to continue to be the main destination of Argentine beef, accounting for about 75% of the total.  In the past few years, cattlemen have sent to market a large number of cull cows taking advantage of high prices paid by beef exporters serving the Chinese market.





The FAS estimated cattle slaughter and beef production for marketing year 2023 will remain practically the same as the official USDA numbers at 13 million head and 3 million tonnes carcass weight equivalent, respectively, the report said.

Slaughter in the first few weeks of 2023 was high, driven by producer selling from poor pastures and high costs, the FAS said.  This continues a two-year trend.

Producers were forced to sell larger proportions of their herds and sell animals at a younger age than they would have if there were more plentiful supplies of feed and forage, the report said.

Normalization of rainfall patterns in March and April (as forecast) could help producers retain more of their cattle and could lead to higher cattle prices as they rebuild their herds.

The calf crop (calves born during June-October 2023) was projected to be significantly lower than the previous years because of poor pasture conditions, the report said.  Although it is too early to estimate, most analysts predicted lower pregnancy rates, despite having a younger herd of cows.

Calves weaned this fall will be large in number but most likely lighter than normal, the FAS said.  Many operations wean early to allow the cows to recover body condition.




The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $161.55 to $167.74 per cwt, compared with last week’s range of $164.13 to $166.59.  FOB dressed steers, and heifers went for $259.52 to $266.29 per cwt, versus $258.17 to $264.02.

The USDA choice cutout Wednesday was down $1.64 per cwt at $284.27 while select was down $1.93 at $272.63.  The choice/select spread widened to $11.64 from $11.35 with 81 loads of fabricated product and 30 loads of trimmings and grinds sold into the spot market.

The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.60 to $1.70 a bushel over the May corn contract.  Bids in Kansas were steady at $0.75 over May, which settled at $6.26 1/2 a bushel, up $0.05 3/4.

The CME Feeder Cattle Index for the seven days ended Tuesday was $189.39 per cwt, down $0.12.  This compares with Wednesday’s Mar contract settlement of $188.20 per cwt, down $1.72.