It seems restrictions imposed by the government on meat exports are rapidly becoming obsolete due to the progressive easing of the established quota. That resulted in a recovery of shipments, which look set to reach 900,000 tonnes by the end of the year – in other words, a similar figure to 2020, before the government’s interventions.
Meanwhile, the other good news is the influx of foreign currency, which added up to US$3.25 billion by November, 28.5% more than in 2021. Looking at 2023, drought seems to be a challenge but the sector, for now, is celebrating a good balance of the year.
Sources in the Rosario Livestock Market (Rosgan) say the adversities the export market has faced haven’t stopped it from ending 2022 with very good sales. According to data published by INDEC (the National Institute of Statistics and Census), beef exports in November totaled 74,921 tons, expressed in terms of its bone-in beef equivalent, which is around 1,500 tons less than the October figures, but 11,500 tons more than the same month of last year.
According to industry forecasts, beef exports came to 828,000 tons in the first eleven months of the year –12% more than the same period in 2021. At this rate, shipments are forecast to reach 900,000 equivalent tons by the end of December –similar to 2020, before export restrictions were established. Meanwhile, in terms of foreign currency income, the exports so far this year represent about US$3.25 billion, 28.5% more than 2021’s income.
In this context, sources at Rosgan warn: “However, despite the positive balance of this year, there is great concern about the downward trend we’ve seen in recent months, and which could continue for a good portion of the next cycle. Although 2022 had started with favorable winds, over the months the scenario became increasingly complex, as it was marked by a context of deeply weak demand and growing commercial uncertainty.
“During the first eight months of the year, beef export prices were higher in 2021, the year when values were already reaching record levels. In April, the average price of an exported ton reached a new record of US$6,300 –55% higher than that registered a year ago. As of the second quarter, exports started to face a complex scenario, mostly due to demand from Europe beginning to show some weakness, which was later joined by China, still immersed in the fight to control Covid with extremely strict measures that caused a sharp slowdown in its economy.”
Today, according to export numbers for November, the average price per exported ton is around US$4,200, some US$2,100 less than the maximum reached in April and almost a third less than last year’s figure. Much of this drop is due to China, which is by far Argentina’s main buyer in terms of volume.
In this regard, sources at Rosgan highlight: “The Chinese market was already beginning to show the first warning signs of a potential collapse in values in August. However, in the last two months that fall has been exacerbated, losing more than 23% since September. Seasonally, Chinese demand rarely offers new price signals before early February, so, barring new disruptions, values should remain stable in the coming months. The uncertainty is focused precisely on the new price standards Chinese importers are willing to validate at the start of the new trading season”.
Finally, the drought is another factor to take into account, but the absence of rainfall may be coming to an end, and it is expected that the long-awaited rainfall cycle for agriculture and livestock will normalize in the coming months. “On the supply side, the weather pattern changes expected to start in the fall will most likely drive a temporary hold-back of livestock, restricting supply availability. Although at the producer level this scenario would be extremely auspicious, as it would allow the long-awaited recomposition of values, for exports it would mean a new pressure factor in the face of still very uncertain demand”, they said.