With the US price of 90% beef trimmings shooting higher, it seems logical to assume that US imports of lean beef trimmings will increase, for this year at least.
And, since most of the fresh beef imported is lean trimmings, it might pay to look at a major world beef exporter to see their beef export position. Canada is a major exporter of fresh beef to the US followed by Australia and Brazil, according to USDA data.
The USDA’s Foreign Agricultural Service’s official stationed in Brazil wrote a report Friday that was published Monday outlining the country’s beef export abilities.
BRAZIL EXPORTING BEEF
Brazil currently is at the bottom of the cattle cycle, liquidating inventories since 2023. The oversupply of cattle for slaughter has led to a slow price recovery and longer-term effect to the replacement market.
The FAS office there forecast a 2% decrease in the cattle crop in 2024 because of the increased slaughter in 2023 and 2024. Increased cow slaughter started last year and was expected to continue at least until the end of the first half of 2024. Inventory liquidation was expected to pressure replacement prices.
With increased volumes of cattle being slaughtered, the FAS forecast record exports of beef in 2024. Domestic consumption of beef is forecast to increase as well, reaching 9.4 million tonnes, for a 4% rise as beef becomes more available to more people.
Brazil is the second-largest beef producer and the largest exporter in the world, accounting for about 25% of global beef exports. And, because of forecasts for the herd liquidation to continue, beef exports could set an annual record this year.
Brazil’s beef exports this year could approach three million tonnes for a 2% increase. The forecast considered increased beef production, strong external demand and foreign competitors who are facing their own challenges.
CATTLE HERD CHANGES
The FAS office there estimated the 2023 calf crop was stable from 2022 at 48 million head but will decrease this year, falling to 47 million head. The 2019-2023 average calf crop is 48.2 million.
In 2023, the FAS estimated the beginning cattle herd at 194.36 million head and for 2024, the estimate was 192.57 million for a 2% decline. This puts Brazil at, or near, the bottom of its cattle cycle, a position that could last for 12 to 18 months, with producers liquidating previously held inventories.
Calf and fed cattle prices in 2023 affected the sector with lower values than those of 2022. Calf prices were 14% lower in 2023 and were forecast to remain low through the first half of this year.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $183.71 per cwt to $184.09, compared with last week’s range of $182.64 to $185.54 per cwt. FOB dressed steers, and heifers went for $289.59 per cwt to $290.93, compared with $283.61 to $290.96.
The USDA choice cutout Monday was up $1.02 per cwt at $306.30 while select was down $0.57 at $295.17. The choice/select spread widened to $11.13 from $9.54 with 63 loads of fabricated product and 14 loads of trimmings and grinds sold into the spot market.
The daily weighted average USDA listed wholesale price for fresh 90% lean beef was $313.49 per cwt, and 50% beef was $97.72.
The USDA said basis bids for corn from feeders in the Southern Plains were $1.40 to $1.50 a bushel over the May corn contract, which settled at $4.30 a bushel, up $0.05 1/4.
The CME Feeder Cattle Index for the seven days ended Friday was $246.38 per cwt, down $0.62. This compares with Monday’s Mar contract settlement of $251.55, down $1.42.