Brazil is a beef-exporting juggernaut, but the country’s ability to tame global prices may soon be tested, Bloomberg reports, noting that the country is about to enter a period of shrinking supplies.
The report noted that a surge in Brazil’s beef production has helped fuel surging exports over the past two years. It came as big herds drove down cattle prices relative to elsewhere, encouraging ranchers to send more animals to slaughter. At the same time, the U.S. and other countries struggled with high food costs and sought sources of cheaper beef. The U.S. imposed hefty tariffs on Brazilian imports earlier this year, but lifted them this fall. The tariffs were seen as a factor in helping U.S. cattle and beef prices soar to records, while the removal of the tariffs added momentum to a pullback from all-time highs for cattle futures.
But the Trump administration’s hopes that imports will help hold down U.S. beef prices come as the cycle is turning, Bloomberg noted, with prices for calves climbing in Brazil as producers begin holding back heifers to rebuild herds. That reduces the number of animals sent to slaughter and marks the start of a tightening supply cycle. Other countries are also in the process of rebuilding herds, while cattle supplies are expected to remain tight in the U.S. for at least another year amid a lack of signs that heifer retention has yet got under way. “Next year will be crucial because all the major countries in the cattle market will be in a scenario fo herd recovery,” Raphael Galo, head of agribusiness at A7 Capital, told Bloomberg.
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