Last bastion for cheap beef fades in latest affordability threat

Cheap beef may soon become further out of reach. Brazil, one of the world’s few remaining sources of abundant cattle, is heading into a period of shrinking supplies that could push global prices higher.

For the past two years, a surge in Brazil’s beef production helped fuel a jump in exports. That’s as ample herds drove cattle prices lower compared to other regions, and ranchers were encouraged to send more animals to slaughter. At the same time, countries such as the US struggled with high food costs, and sought out sources of cheaper beef.

That cycle is turning, with impacts that will ripple through global markets and hamper US President Donald Trump’s efforts to bring down beef prices.

Climbing prices for calves in Brazil are signaling the start of a new phase, in which ranchers start holding back female cattle to rebuild herds. The practice, known as heifer retention, reduces the number of animals sent to slaughter and marks the beginning of a tightening supply cycle.

“We are coming out of the phase of excess, and the phase of scarcity hasn’t even begun,” said César de Castro Alves, manager of agronomic consultancy at Itau BBA bank. Scarcity, he added, is likely to last a few years.

That’s a major reversal for global beef markets, and bad news for consumers as demand for protein remains high. Trump has made lowering beef prices a priority as affordability has become a major issue among US voters. The president has said he would increase imports, and has eased some tariffs on meat.

American consumers are facing sky-high beef prices as US herds are at the lowest in decades after years of drought and high feed costs. In comparison, Brazil’s ample supplies have given local meatpackers a cost advantage over rivals in the US, Australia and elsewhere. That helped the country ramp up exports not only to the US but also to major buyers such as China.

Now, slaughter rates are expected to slow, reducing available beef supplies.

Improved breeding efficiency may soften the downturn compared with previous tightening cycles, said João Otávio de Assis Figueiredo, a commodity analyst at consultancy Datagro. Still, the firm forecasts that Brazil’s cattle slaughter will fall 5.3% next year, following two straight years of growth.

And the issue is aggravated by a downturn in other beef producing countries as well. Cattle supplies in the US are expected to remain tight for at least another year with heifer retention also yet to begin in earnest, while some retention is expected to occur soon in second-largest exporter Australia as well. That’s affecting prices for all, even as countries have different eating habits and some cuts of meat can be cheaper than others.

“Next year will be crucial because all the major countries in the cattle market will be in a scenario of herd recovery,” said Raphael Galo, head of agribusiness at A7 Capital and an independent consultant for feedlots in Brazil.

Analysts at Rabobank expect Brazil’s total beef output to fall between 5% and 6% next year. Yet Brazil should continue as the largest beef exporter, with the bank estimating a record 4.4 million tons in overseas sales. Brazil may even ship more beef to the US in the first months of 2026, following the exemption of 50% tariffs that were effective between August and November.

Still, those shipments will likely be at higher prices, especially considering global consumers’ unflagging desire for proteins.

“Restricted supplies next year can make the market be really firm, because international demand remains strong,” said Paulo Mustefaga, executive director of the nation’s meatpacking association Abrafrigo. — Bloomberg