Raw Beef Monthly Update (Brazil) 2025-12

The European Union will begin provisional application of its trade agreement with Mercosur, which is expected to significantly affect the agri-food industry. This agreement aims to enhance market access for agricultural products between the two regions, potentially boosting exports and imports of key commodities such as beef, sugar, and ethanol. Stakeholders in the agri-food sector should prepare for changes in trade flows and regulatory standards as the agreement takes effect.

The European Union will begin provisional application of its free trade agreement with Mercosur, aiming to capitalize on early tariff reductions. This landmark pact, finalized after 25 years of negotiations with Argentina, Brazil, Paraguay, and Uruguay, will eliminate approximately 4 billion euros in tariffs on EU exports. While countries like Germany and Spain support the deal to offset US tariff impacts and reduce reliance on China for strategic minerals, France, the EU's largest agricultural producer, opposes it due to concerns over increased imports of beef, sugar, and poultry potentially harming local farmers.

European agricultural organizations have strongly criticized the provisional enforcement of the EU-Mercosur trade agreement, citing concerns over competitiveness and regulatory standards. Key groups such as France's FNSEA, Spain's Ava-Asaja, and Ireland's IFA argue that the agreement threatens local farmers by allowing increased imports of more competitive Mercosur products, particularly Brazilian beef. The controversy intensified following a report highlighting unresolved issues with Brazilian beef exports, including hormone treatments. Despite these objections, the agreement is projected to boost Brazilian agricultural exports to the EU by up to US$3.8 billion annually after ten years, with tariff rate quotas benefiting products like beef, sugar, ethanol, and rice. The EU is set to receive an additional 99,000 tons of Mercosur protein imports annually, with Brazil accounting for 42.5% of this volume, gradually phased in over five years.

Brazil solidified its position as the top global beef supplier in January 2026 by exporting 264,000 tons, a 26.1% increase year-on-year, generating US$1.404 billion in revenue, up 40.2%. This growth is driven not only by volume but also by higher product value in markets demanding quality, traceability, and standardization. To meet stringent international requirements, Brazilian slaughterhouses are adopting Pensalab's Micronir, a portable NIR technology device that accurately and rapidly measures meat fat content without destructive sampling. This innovation replaces less reliable manual and laboratory methods, ensuring consistent quality and reducing shipment rejections, which currently affect 4-5% of large operations. The technology enhances product shelf life, sensory quality, and reduces financial losses from returns, reinforcing Brazil's competitiveness in key markets like the USA and China.

The European Commission announced it will provisionally apply the free trade agreement with Mercosur, covering Argentina, Brazil, Paraguay, and Uruguay, shortly after the recent ratifications by Argentina and Uruguay. This trade pact, concluded after 25 years of negotiations, aims to eliminate approximately 4 billion euros in tariffs on EU exports, marking the bloc's largest tariff reduction agreement. While the agreement still requires approval from the European Parliament and remaining Mercosur members, the Commission intends to start tariff reductions and other trade measures two months after the exchange of notifications. The move faces opposition from France, the EU's largest agricultural producer, concerned about increased imports of beef, sugar, and poultry harming domestic producers. Supporters, including Germany and Spain, argue the pact is crucial to offset U.S. tariffs and reduce dependency on China for essential minerals.

The start of 2026 signals a turning point in Brazil's livestock cycle, with a slowdown in the culling of breeding females and increased retention on farms, indicating tighter future supply. This structural shift is reflected in rising prices on B3, where the March 2026 fattened cattle contract has gained 10.68% year-to-date, trading around R$350 per arroba. Strong domestic demand, supported by income tax exemptions, historically low unemployment, and rising family incomes, alongside favorable export conditions due to restricted global supply and high beef prices, are expected to sustain price growth throughout 2026. Analyst Felipe Fabbri from Scot Consultoria projects the arroba could surpass R$360 this year and potentially reach R$400 to R$500, contingent on the cold storage industry's margin health. In 2024, tight industry margins limited price increases, leading to a subsequent price drop in mid-2025; thus, the industry's margin will be critical in determining how far prices can rise in 2026.

The Argentine Parliament ratified the Mercosur-EU free trade agreement on January 26, following 25 years of negotiations, with a strong Senate vote of 69 in favor and 3 against. This agreement, which also received approval from Uruguay and the Brazilian Chamber of Deputies, aims to enhance trade flows of agri-food products such as beef and sugar between Mercosur countries and the European Union. However, the treaty faces opposition from France due to concerns over increased imports potentially impacting local farmers. The agreement's ratification by all Mercosur members and the EU is pending, signaling significant upcoming changes in agri-food trade dynamics in the region.

In January, São Paulo's agribusiness sector achieved a trade surplus of US$1.31 billion, driven by exports totaling US$1.84 billion against imports of US$530 million. The state accounted for 17.1% of Brazil's agribusiness exports, maintaining its national leadership ahead of Mato Grosso and Minas Gerais. Key export products included the sugar and alcohol complex (25.3%), forestry products (18.8%), meat (16.6%), juices (8.9%), and coffee (7.2%), which together represented 76.8% of total agribusiness exports. Compared to January of the previous year, exports of forestry products, meats, and soybeans increased, while sugar and alcohol, coffee, and juices saw declines due to price and volume fluctuations. China remained the largest export market with 21.9% of sales, followed by the European Union and the United States.

The fat cattle market in São Paulo remained stable on Thursday, with lean but sufficient supply maintaining price levels, according to Scot Consultoria's 'Tem Boi na Linha' report. Few transactions exceeded reference prices for cows and heifers, indicating limited upward pressure on prices. Slaughter schedules averaged six days. In Espírito Santo, prices were unchanged, while Tocantins experienced low supply and shorter slaughter schedules, with fat cattle prices rising by R$3.00 per arroba in southern Tocantins and heifers by R$5.00, though cow prices remained stable. The northern region of Tocantins and Northwest Paraná reported stable prices with short slaughter schedules averaging four to five days.

Brazil has become the world's largest beef producer, surpassing the United States by exceeding 12 million tons in production by the end of 2025, according to USDA estimates. This achievement is driven by the adoption of advanced technologies, including drones equipped with multispectral and thermal sensors, which enhance operational efficiency, pasture management, and early disease detection. Drones enable faster monitoring of herd health, pasture quality, and infrastructure issues, contributing to up to 30% operational gains and reducing the average age of slaughter. Additionally, drone-based aerial spraying and seed dispersion improve pasture maintenance and recovery, supporting sustainable livestock farming. These technological advancements, combined with genetic improvements, position Brazil as a global leader in efficient and competitive beef production.