Beef oversupply in Mexico pressures producer prices

Excess beef supply in Mexico is already putting pressure on producer prices and could deepen problems in the livestock sector. According to the Mexican Meat Council AMEG, the suspension of live cattle exports to the US has left around 1.6 mln calves on the domestic market, potentially adding about 500 thsd tons of beef supply.

Mexico normally produces around 2.3 mln tons of beef annually, exports about 300 thsd tons and imports roughly 200 thsd tons. Taking into account cattle that were not shipped to the US, production could rise to 2.8 mln tons, according to AMEG.

Additional pressure is coming from Brazilian beef imports. The Mexican government approved a 70 thsd ton import quota, of which around 36 thsd tons have already entered the country. AMEG is also concerned that some Brazilian beef facing limited access to the European market could be redirected to Mexico, although this remains only a potential scenario.

The supply surplus has already affected domestic prices. Prices for lean calves fell from 86 to 78 pesos/kg, while carcass prices declined from 125 to 110–112 pesos/kg. Retail prices, however, remain much higher at around 240–250 pesos/kg, prompting producers to question whether higher imports are bringing any benefit to consumers.

AMEG has asked the government to cancel the 70 thsd ton import quota. The industry also points to high financing costs and rising feed expenses, particularly for corn and soybeans, which are further squeezing producer margins as cattle and beef prices decline.

Tags: prices, Beef cattle, Mexico