Brazilian beef exports steady but shift course

Beef exports out of Brazil were almost unchanged year-on-year in 2016, however the supplier’s global footprint continued to shift towards some new markets, in which Australia has traditionally operated.

According to data from Secretariat of Foreign Trade (SECEX), Brazilian beef exports in 2016 totalled 1.08 million tonnes swt, back slightly from the previous year and marginally above the 1.02 million tonnes swt exported by Australia (DAWR). However, exports increased significantly in the case of China and Saudi Arabia which re-opened to Brazil in 2015. The gains in new markets were offset primarily by falls in exports to Russia – which has experienced an even weaker currency than the Brazilian Real and whose economy, and buying power, has suffered from low oil prices – and Venezuela – also impacted by low oil prices and a floundering economy.

In 2016, Brazil exported:

• 181,000 tonnes swt to Hong Kong, up 9% year-on-year
• 165,000 tonnes swt to Egypt, back 7%
• 165,000 tonnes swt to China, up 69%
• 131,000 tonnes swt to Russia, back 23%
• 96,000 tonnes swt to Iran, back 2%

Interestingly, while some (previously grey channel) trade is expected to have been diverted from Hong Kong to China since the market reopened, Hong Kong still experienced growth last year and 2016 marked the third highest year on record. In addition, Brazilian beef shipments to combined Hong Kong and China were a record breaking 346,000 tonnes swt in 2016 and accounted for 32% of Brazilian exports.

China was Australia’s fourth largest export market in 2016, taking 94,000 tonnes swt, and while Australian product has experienced greater competition from Brazil, declines were recorded across most other markets due to supply constraints. Australian frozen grassfed beef exports to China, which is primarily what Brazil exports, declined 45% in 2016; in contrast, Australian grainfed beef to China increased 9% over the year.

While Brazil still does not have beef access to Japan and Korea (Australia’s largest and third largest markets, respectively, in 2016), the US did allow access last year (albeit limited by quota and an out-of-quota tariff) and there has been a steady stream of small shipments (127-594 tonnes swt per month) since September.