The increased availability of Brazilian and Australian beef is putting downward pressure on imported beef prices in the United States, although domestic market fundamentals remain solid, an Argentine trader told World Beef Report (WBR).
The source noted that Brazil has virtually exhausted its quota in China and is redirecting significant volumes to the United States, while Australia is following the same strategy after filling its own quota. "That is pushing South American imported beef prices lower and dragging Australian prices down as well," he explained. However, he believes this is a temporary situation that could last another four to six weeks, until mid-August.
Another regional broker agreed that the main source of pressure on the US market is the sharp redirection of Brazilian beef. "The major exporters (JBS, MBRF, Minerva) are shipping a lot of volume to the US. The market is oversupplied with low-priced Brazilian beef. China used to absorb that supply and keep the market balanced, but that has disappeared, and now it is affecting everyone," he said.
As a reference, he noted that bids for Argentine quota beef are currently around US$ 7,000 CFR per ton, approximately US$ 1,000 below exporters' current asking prices and the levels seen in early May. "That is the impact of the larger Brazilian supply," he summarized.
For Paraguay, an industry source reported niche quotations of US$ 7,200 CFR per ton for organic manufacturing beef blocks.
Despite the larger supply, one trader emphasized that the US domestic market remains strong. Domestic 90CL beef prices continue to hold firm, while the premium over imported product has widened significantly. A year ago, the spread over Australian 90CL was around US$ 0.60/lb; today it has widened to approximately US$ 1.00/lb, while Brazilian product is trading around US$ 1.20/lb below the domestic price.
According to the trader, that gap reflects continued strong demand for manufacturing beef. He also noted that a larger proportion of cuts is being directed to grinding because of the high prices for lean beef, another indication that consumption remains robust despite the increased inflow of imported product. "The market is still healthy; demand is there," he concluded.
In his view, the outlook for the fourth quarter will depend on how several outstanding issues evolve, including Brazil's adaptation to the new European sanitary requirements and the normalization of trade flows following the exhaustion of China's import quotas. In the meantime, he believes the weakness in imported beef prices is primarily the result of a temporary oversupply rather than any deterioration in US demand.
