Argentinian Beef Exports On The Rise – Lion’s Share Heading To China
Structural changes in Argentina’s beef industry have resulted in a significant lift in Argentinian beef exports over recent years. And the lion’s share of these exports have found a home in China, according to agribusiness banking specialist Rabobank.
In its Q2 Global Beef Quarterly report, titled, The Changing Face of the Argentinian Beef Industry, Rabobank says Argentina remains one of the largest producers, consumers and exporters of beef in the world, but its beef consumption has been slowly declining over recent decades.
“In 2022, Argentinian per capita beef consumption dropped to 47.5kg – its lowest level in the last 30 years,” Rabobank senior animal protein analyst Angus Gidley-Baird said.
“While several factors have contributed to this, the rising cost of beef is a leading cause with retail beef prices in Argentina having increased by more than 35 per cent (in USD) since January 2019.
Rabobank NZ Senior Animal Protein Analyst, Angus Gidley-Baird
“Beef consumption in Argentina has a powerful cultural connection and rising prices and declining consumption have become a focus for government policy. And, in an effort to curb rising inflation and limit rising beef prices, export restrictions were put in place in June 2021.”
Despite these restrictions being recently extended until the end of 2023, the report says, Argentinian beef exports have increased to record levels.
“The 14.4 per cent year-on-year increase in Argentinian beef exports in 2022 resulted in a new record in volume and value terms, with this driven by a combination of increased Chinese demand, currency devaluation (leading to greater competitiveness) and reduced domestic consumption,” Mr Gidley-Baird said.
“From 2010 to 2019, exports represented on average of around 10 per cent of total beef production. From 2020 to 2022, this share has more than doubled to 26 per cent. China remains the dominant market for Argentina – with 77.6 per cent of beef shipments sent to China in 2022 – and we expect this to continue moving forward.”
With Argentinian beef exports into China expected to remain strong, Mr Gidley-Baird said, the Argentinian industry would ensure ongoing competition for global beef producers – including those from New Zealand – exporting product into that same market.
Global Update
The report says global beef supply is expected to remain largely steady over the next 12 months with forecast production increases in Brazil (two per cent) and Australia (up seven per cent) offset by an anticipated decline in US production (down two per cent).
“With increasing production, both Brazil and Australia are relying on an increase in export volumes given domestic consumption remains static or is declining. China has been a key destination market, and with covid lockdown measures removed in late 2022 this market was considered an opportunity for growth. However, we expect Chinese beef imports to slow in Q2 and potentially decline in Q3 given the slow pace of market recovery,” he said.
The report says Australia and the UK’s new trade agreement will come into force on May 31 and will provide Australia with a starting duty-free quota of 35,000 tons.
“While all trade agreements are beneficial, such a small market for Australian exports is not expected to result in large changes to Australian beef exports,” Mr Gidley-Baird said.
New Zealand update
The report says the transition into more settled autumn weather conditions has been welcomed by farmers across New Zealand following the devastating weather events in January and February.
Mr Gidley-Baird said New Zealand’s beef production for the first quarter of 2023 lifted one per cent year-on-year.
“This increase in production was underpinned by dairy farmers sending cull cows for processing earlier than usual, due to tightening margins,” he said.
“Overall, beef exports in Q1 2023 were two per cent higher year-on-year, with exports to China and the US both lifting eight per cent. However, earnings across all key markets were back significantly on prices from a year ago, with total returns back 15 per cent year-onyear.
“The AgriHQ North Island bull price rebounded in Q1, supported by strong US demand and China’s re-opening. Farmgate beef prices are expected to remain firm through winter, off the back of limited global supplies. High Chinese beef inventories and the possible dampening of US consumer demand are key downside risks.”
The report says a total ban on live cattle exports came into effect on April 30 2023.
“New Zealand exported 137,500 head of cattle in 2022, delivering NZD 374 million in returns. Dairy heifers dominated New Zealand live cattle exports – accounting for 76 per cent of all cattle exported in 2022,” he said.
“The two-year transition period, we believe, has allowed farmers to adapt and although it will have an impact, we don’t expect a significant increase in beef production.
“The challenge for the dairy industry is what to do with the well-bred heifers that would have been exported. Sexed semen is helping to some extent as it is allowing farmers to produce more bull calves, which can be reared and enter beef production systems. However, high calf-rearing costs and regulatory uncertainty is creating challenges for both dairy and beef farmers and more calves may end up being processed as bobby veal.”
Rabobank New Zealand is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 120 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of about 10 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country's leading agricultural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 32 offices throughout New Zealand.
Media contacts:
David Johnston
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Rabobank New Zealand
Phone: 04 819 2711 or 027 477 8153
Email: david.johnston@rabobank.com
Denise Shaw
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Rabobank Australia & New Zealand
Phone: +612 8115 2744 or +61 2 439 603 525
Email: denise.shaw@rabobank.com