US beef exporters will soon face greater global competition, as Argentina and Brazil get ready to increase sales.
Argentina announced it will relax a beef export cap enacted midyear to curb domestic food inflation. And China said it will ease restrictions on Brazilian beef imports imposed after “atypical” mad cow was detected in early September. The two South American countries are among the world’s biggest beef producers and exporters.
US beef exports have risen 20% so far this year, compared with a year earlier, as Argentina and Brazil remained sidelined from export markets for several months.
A return by Argentina and Brazil to their traditional export pace could pressure beef processor margins in the US, and further reduce beef prices to US consumers and restaurants. US beef prices remain well above historical averages, although they are down 20% from an August peak, as Gro predicted here.
China has emerged as a major buyer of beef, in the wake of the African swine fever epidemic in 2018. Argentina traditionally provided about a quarter of China’s beef imports, while Brazil provided about 40%.
Argentina has a longstanding problem with inflation, currently around 50% annualized, and the country’s beef export ban was intended to help tame domestic food price increases. Other countries, including Russia and Ukraine, also have restricted exports to curb food inflation.
Argentina’s relaxation of its export ban follows pressure from the country’s beef industry. In addition, a decline in the value of the peso makes beef exports, which are valued in dollars, all the more profitable for producers and can bring greater tax revenue for the government.