US market rebuffs highly-taxed Brazilian beef

The performance of beef exports to the United States (US) is unfavorably declining, which is set to appear in the third quarter balance sheets released by the only three companies that serve that market, JBS, Marfrig, and Minerva, all listed in the Sao Paulo stock exchange.

What puts JBS and Marfrig in the spotlight is that both have local plants installed in America, which may be disadvantageous considering that inflation has risen in the country and the Fed confirmed interest rates at 0.75 percentage points, which inevitably brings consumption down.

Notwithstanding, the declining performance might also stem from the fact that Brazilian beef products have been on the highest fringe of the American import tax for a few months, hence reaching customers at higher prices.

While Brazilian shipments hit a monthly record in September with more than 231,400 tonnes – and China expanded its overall shipments over August to 137,700/t – sales to the US dropped to 5,800 tonnes compared to the previous month (7.2 thousand/t).

See below the track record of the volume of beef (HS 0201; HS 0202) exported from Brazil between January 2021 and August 2022, according to the DataLiner business intelligence service by Datamar.

Brazilian Beef Exports to the US | Jan 2021 – Aug 2022 | WTMT

Source: DataLiner (click here to request a demo)

The data released by industry associations Abrafrigo and Abiec, based on government data, show differences between export levels in the two months but without substantial distortion. Compared to July, the distortion was significant, with the latter claiming 6.6 thousand/t and no more than 17 thousand/t registered by Abrafrigo.

In any case, exports to the US have weakened since April, when they surpassed 9,000/t.

The scenario could only arise as Brazil’s exports exceed the quota destined for countries with a mobile import tariff of 4% to 6% depending on the meat cuts established by the tax authorities since the Trump administration. Brazil accounts for 30 thousand/t of the total of almost 65 thousand/t.

Since Brazil exported more than its dedicated share in the quota, almost 100 thousand tonnes since January, exports beyond the quota implicate a 26.4% tax in the importers’ accounts.

For better or worse, deliveries of beef protein from Brazil to the US already surpassed 82,300/t in 2021, in addition to revenue, which was US$ 587 million.

Year to date, up to September, Brazil exported 1.751 million/t (with China receiving more than 900 thousand/t), with more than US$ 7.4 billion in revenue.

Source: Money Times

To read the full original article, please go to: https://www.moneytimes.com.br/jbs-jbss3-marfrig-mrfg3-e-minerva-beef3-economia-do-eua-recusa-carne-brasileira-com-mais-imposto/

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