Argentine Beef Supplies Forecast 2021-22
MICA Virtual Conference October 2020 Bovine Herd
Argentina - Bovine Herd - Million Heads Steers and Heifers Bulls Calves Cows 60,0
50,0 15,3 15,6 15,3 15,3 15,2 15,0 40,0 1,2 1,3 1,3 1,3 1,3 1,2 30,0 14,1 14,2 14,7 14,9 15,0 14,7
20,0
10,0 22,5 23,0 23,5 23,5 23,0 23,0
0,0 2016 2017 2018 2019 2020 2021 (F) • Since 2016, the herd is steady at around 54 million heads. For 2021-22 we foresee a stable number of cows and a slightly reduced calf crop due to high cow slaughter in 2018-19 and an ongoing drought this spring. Skyrocketed Chinese demand increased cow slaughter but, on the other hand, high prices for feeder cattle encourages producers to retain and rebuild cow herds. • Steers are 14% of total bovine herd, heifers are 14%, calves 27%, cows 42% and bulls 2%. • The most widespread cattle breeds are Aberdeen Angus and Hereford at the Pampas, and Brangus and Braford at the northern sub-tropical areas. Beef Production
Argentina - Bovine Slaughter (Millions) Steers, Bulls and Heifers Calves Cows Beef Prod. 16,0 3,3
14,0 3,2 12,0 3,1 10,0 7,7 7,0 8,0 11,2 11,7 11,2 11,2 3,0 6,0 2,9 4,0 3,4 3,2 2,8 2,0 2,1 2,5 2,7 2,4 2,4 2,5 0,0 2,7 2017 2018 2019 2020 (est) 2021 (f) 2022 (f)
In 2019, the government of Argentina changed carcass grading system. • Beef availability in 2020 is likely to be higher than 2019’s figures, at around 3,2 million tons cwe, but sooner or later a rebuilding herd phase is expected, so we are forecasting tighter supplies from 2021 onwards. Cow slaughter, since 2nd Half 2020, it is being reduced compared to 2018-19 peaks. • Between January and September 2019, the number of cows slaughtered was 2,14 million, and on the first nine months of this year, this number declined to 1,90 million (-11,4%). These figures were compensated by more steers and heifers sent to slaughter. Beef demand
Beef Production, Domestic Consumption and Exports (Thousande Tons. CWE) Domestic Market Exports Per capita 3.500 60,00
3.000 55,00
2.500 50,00
2.000 2.305 2.304 2.325 2.300 2.514 45,00 2.531 1.500 2.411 40,00 1.000
35,00 500 844 875 775 750 552 234 311 0 30,00 2016 2017 2018 2019 2020 (est) 2021 (f) 2022 (f) • Since 2016, export ban and taxes were reduced or removed. As a result, beef exports jumped from 230k tons in 2016 to more than 850k in 2020. However, beef production growth was slower and domestic consumption fell from 60 to 50 kilos / year. We expect moderate contraction on exports for 2021 and 2022, due to reduced cattle supplies. • Export taxes were reduced to zero at the end of 2015 and were introduced again in 2018 at a level of around 5%. Earlier this year the Government of Argentina raised export taxes to 9% and now there are talks on course to cut them back to 5%. Beef Exports Argentina - Beef Exports - Thousand Tons (pw) China ROW 600,0
500,0
400,0 426,7 300,0 206,6 278,4 200,0 237,2 97,0 11,4 21,2 55,0 100,0 0,8 40,8 162,4 141,1 111,0 117,7 117,8 90,7 99,5 112,2 89,4 103,1 0,0 2012 2013 2014 2015 2016 2017 2018 2019 jan aug jan aug 19 20
China frozen beef imports - Jan/Aug 2018/20 - Tons 600.000
500.000
400.000
300.000
200.000
100.000
0 Brazil Argentina Australia Uruguay New Zealand Others • Argentine Beef exports growth, comparing the first eight months of the last two years, is in first place explained by increased Chinese demand and in second place due to significant increased shipments to the US. Argentine beef imports were responsible of 23% of total Chinese frozen beef imports, compared to Australia 12%, Uruguay 11% in a market leaded by Brazil with a 36% of market share. • During the first eight months of 2020, Argentine beef exports have risen 55 thousand (net weight) tons, compared to the first eight months of the preceding year. Exports to China rose by 41 thousand tons, and exports to the US resulted in 17,5 thousand tons (+2360%). Beef Exports to the US
Argentina - Beef Exports to the US (Product Weight Tons) 7.000 6.000 5.000 4.000 3.000 2.000 1.000 0 • Since the market became operative for Argentine beef exports, in late 2018, shipments to US market has been reduced. However, since mid-2019, we observed a growing number of business being done. These were on average at a level of 200 tons monthly and at an average price of around 6 thousand dollars per ton. However, this year Argentina fulfilled its 20,000- quota allocation before the end of the third quarter. Business are 15% of chilled beef cuts, at an average price of u$s 5,700/Ton; and 85% of frozen beef for manufacturing, at an average Price of u$s 4,380/TON. • According to sources in companies exporting to the US, trimmings and lean cuts for manufacturing are the most demanded products. However, there are importers interested in rib eye, round cuts and kosher products. Argentina - Eligible Plants Certified to Export Meat to the United States Plant Export to China Daily Slaughter Capacity (number) Swift Argentina YES 2,200 SAIEP La Anónima YES 650 Quickfood YES 500 Marfrig Argentina YES 700 Frig. Rioplatense YES 1,600 F.R.I.A.R. YES 850 Frig. Gorina YES 1,200 Arre Beef YES 1,300 S.A. Carnes Pampeanas YES 500 Frig. Alberdi YES 350 Logros YES 650 SAIEP Pampa Natural YES 500 Forres Beltrán YES 800 Azul Natural Beef YES 500 Argentine Beef Export to US
• All14 plants allowed to export fresh beef from Argentina to the US are also exporting to the Chinese market. This fact establishes a price competition to reallocate shipments from China to the American market. • 90CL importing price is around 4,500 dollars / TON CIF, while similar product (90VL) shipped to China is in the range of 4,200 to 4,800 subject to a 12% tariff. • Knuckle avg import price is close to 4,750 at US market but you can get up to 5,200 at the Chinese market. • 2020 Tariff Rate Quota 20,000 T certification was completed by the end of the third quarter. Shipments to the US should be lower in the fourth quarter. We expect to fulfill again the 20,000 beef quota in 2021 in a context of small differences between US and Chinese import prices.