The drought that has hit the United States in recent years has caused a massive liquidation of cattle herds. The effect of this drop in beef production levels is estimated at 5% compared to the previous year. This statement is based on estimates from the United States Department of Agriculture(USDA) and the Agriculture and Horticulture Development Board of the United Kingdom.
U.S. beef exports on the decline?
In this context, U.S. beef exports could decrease by up to ten or eleven percent this year. Likewise, this situation would cause the United States to lose its place as the sixth largest exporter of beef to China, a country that, in view of the fall in its economic activity, will seek cheaper prices in Brazil and Australia.
The advantage gained over the U.S. will impose more competitive prices in alternative markets. This is the case of Australia, whose foreign sales would grow by 13% annually, which, paradoxically, will include the United States as a client, in addition to East Asia. Brazil, on the other hand, is expected to increase its foreign sales by 4%, including in China.
A smaller share of that niche lost by the United States could be captured by Argentina and Uruguay, although the latter are limited by the local cattle herd in each country, the unattractive exchange rate in the case of Argentina, and the export surpluses of both countries.
Beef in the world
While the North American export quota relinquishes its predominant place, world cattle productivity is not expected to show any notable ups and downs this year.
To such an extent that suppliers are already lining up in the feedlots, such as those mentioned above: Australia, which will increase fattening by more than 10% with improvements in pastures, and Brazil, which will rely, to produce 2% more, on stimulated domestic consumption. China and India will also take advantage of the situation, with a 1% higher export quota.
All this scenario will have, at the same time, a greater impact on the slaughter of young cattle. An effect on the herd that will be measured in the future. Today, everyone is rushing the meat on the barbecue.
China and the fall of its domestic consumption
In Argentina, the president of the Chamber of Meat Industry and Commerce(CICCRA), Miguel Schiariti, commented on this situation.
«The slowdown of economic activity in China, which has fallen sharply, is generating the fall in commodity prices , which is why the price of meat between last year and this one fell between 25 and 30%, depending on the cuts, « he said.
«The United States is in a stage of stockreduction, which will avoid paying better prices than those offered by the Asian giant, given that it is having an oversupply of beef for the hamburger and processed meat market,» Schiariti pointed out.
«This makes us assume that beef will not recover, until at least one year from now, the values it had in 2021 and early 2022,»estimated the president of CICCRA.
