Productivity gains and increased supply drive price adjustments, with exports playing a balancing role
02/17/2025
After being one of the main drivers of inflation in 2024, beef prices in Brazil are showing signs of decline, a trend expected to continue throughout the year’s first half. Productivity gains and increased female cattle slaughter are key factors behind this movement, even as the livestock cycle shifts toward lower supply. Additionally, the opening of new export markets for Brazilian beef could help stabilize domestic prices.
The price of live cattle, which surpassed R$350 per arroba (15 kg) in São Paulo last November, has since dropped to around R$320, while beef cuts are also becoming more affordable. In the Greater São Paulo wholesale market, the price of the very popular picanha—similar to the top sirloin cap—fell by 8.28% over 30 days (as of January 13), according to Scot Consultoria. Alcatra (rump steak) and maminha (rump skirt) declined by 4.26%, and contrafilé (striploin) dropped by 3.97%.
The Brazilian Beef Exporters Association (ABIEC) forecasts a 10% increase in beef exports in 2025, reaching nearly 3.3 million tonnes. Negotiations with key markets such as Vietnam, Japan, Turkey, and South Korea could fuel this growth.
However, ABIEC does not expect the rise in exports to reduce domestic supply. Speaking to Valor, the association’s president, Roberto Perosa, said that while cattle availability will adjust throughout the year due to the livestock cycle shift, the supply to slaughterhouses and both domestic and international consumers will remain steady.
Mr. Perosa attributes this stability to a record grain harvest, which is expected to improve conditions for cattle finishing and feedlot operations, ultimately increasing carcass yields and maintaining overall beef production levels. “We will see productivity gains alongside a reduction in raw material costs,” he said.
Beyond productivity gains, Mr. Perosa said that most beef cuts exported by Brazilian meatpackers—such as front cuts and offal (including tongue, heart, tripe, and intestines)—are not widely consumed in Brazil. This means exports do not significantly compete with domestic beef supplies.
“Exports play a key role in stabilizing cattle prices in Brazil. Selling these products to Asia, where they fetch higher prices, reduces pressure on the cost of cuts consumed locally, such as filé mignon (tenderloin) and picanha (sirloin cap),” Mr. Perosa noted. “The more we export, the better the cost structure for meatpackers. That’s why opening new markets is crucial. Exports determine whether a meatpacker operates at a profit or a loss,” he added.
According to Leonardo Alencar, head of agribusiness, food, and beverages at XP, the increased culling of non-pregnant female cattle at this time of year is also expected to boost supply and keep prices under control throughout the first half of 2025.
“The question is how production and slaughter metrics will play out over the year. While slaughter numbers are expected to decline, the average weight per animal is likely to increase,” Mr. Alencar noted.
Maurício Palma Nogueira, executive director at consultancy Athenagro, challenges the expectation of supply restrictions in 2025 and also highlighted productivity improvements. “The cattle herd is getting younger, we are increasing efficiency, and turnover is accelerating. This allows for more female cattle to be sent to market without compromising herd size,” he said.
This will be the first livestock cycle shift since Brazilian beef entered the Chinese market, and Mr. Nogueira believes this could lead to different dynamics than seen in previous years. “It appears that the cattle industry is now capable of responding more quickly, which could limit major price spikes for consumers,” he said.
“As we look ahead, beef production is likely to adjust faster compared to previous cycle shifts,” he added.
Mr. Nogueira expects some fluctuations in cattle prices and beef retail prices but at a more moderate pace than in 2024. While there could be some price adjustments after the rainy season, stability is expected by the end of the year.
Mr. Perosa, from ABIEC, also anticipates more balanced beef prices in the domestic market but acknowledges that achieving a 10% export growth target “is feasible but challenging.” Even if negotiations for new markets do not materialize as planned, exports could still rise through increased sales to Chile and Mexico, as well as stronger trade with the Middle East. There is particular optimism regarding Vietnam and Japan, both of which President Lula is set to visit in the coming weeks—following a recent visit by Mr. Perosa himself.
Cesar de Castro Alves, head of agribusiness consulting at Itaú BBA, estimates that beef exports could grow between 2% and 5% in 2025, with additional upside potential if new markets open.
Mr. Alencar, however, is skeptical about reaching a 10% export increase, even with expected productivity gains in Brazil’s beef industry.
In 2024, Brazil set a new export record, shipping 2.87 million tonnes of beef—equivalent to 32% of total production.
For the U.S. market, the second-largest buyer after China, Brazil had already exhausted its 65,000-tonne duty-free beef quota—shared with nine other countries—by January 15, underscoring strong demand.
Despite this, Oswaldo Ribeiro Júnior, president of the Mato Grosso Cattle Ranchers Association (ACRIMAT), reassured that both domestic and international markets will remain well-supplied. “There will be no shortage of beef for either market,” he said.
*By Rafael Walendorff e Nayara Figueiredo, Globo Rural — Brasília and São Paulo
Source:Valor International