en.Wedoany.com Reported - Supply and demand fundamentals continue to support the beef and lamb production business, but the market is shrouded in noise of uncertainty.
Uruguay's latest export data shows that the average price per ton for May exports reached $8,515 (based on shipment weight), marking the fourth consecutive monthly record, up 24% year-on-year. However, shipment volumes decreased by approximately 10,000 tons compared to the same period last year, directly impacted by slaughter levels—although May slaughter numbers recovered from April, they were still 21% lower than the same period last year.
The first half of the year is expected to close with a contraction of around 20%, with market expectations concentrated on increased supply in the second half to alleviate the severe deficit seen early in the year. The biggest concern for the domestic production sector is health issues: how to coexist with ticks and avoid a repeat of the San Jacinto incident, where market access was hindered due to acaricide residues.
China's implementation of import quotas on beef from its main suppliers has severely distorted trade flows with Brazil and Australia, prompting them to accelerate shipments to secure available quotas. The consequence is inventory oversupply, with new order business cooling in recent weeks, which also affects Uruguay, although its beef exports are largely free from quota issues. The market is currently uncertain whether China will maintain its quota policy or make flexible adjustments in the coming months.
In the United States, President Trump hinted at eliminating import tariffs on non-quota beef from its suppliers, attempting to avoid an inflationary spiral for consumers in an election year. Subsequently, the plan was abandoned due to internal party divisions. Additionally, news of screw worm in Texas further dampened the dynamics of new export business in that market.
Europe, another major market for Uruguayan beef, plans to require Brazil to certify that animal-derived products are free of antimicrobial agents starting in September, a condition that currently seems difficult to meet for beef. Despite efforts and certification agreements, questions remain about how Brazil can maintain beef trade with Europe. This could open market opportunities for competitors such as Uruguay, Argentina, and Australia.
Macro factors such as the prolonged war in the Middle East, rising global inflation, and potential economic recession also contribute to the noise. The key distinction lies in identifying which factors are temporary and which may change the landscape. Fundamentals remain solid for now, with price outlooks firm.
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