IN another reflection of the rapidly tightening supply of domestic beef in the United States this year, Brazil has for the first time surged past Australia as the largest supplier of imported beef to the US.

Brazil’s monthly shipments in April reached 48,000 tonnes – up from just 8000t in the same month last year. For the past four decades, Australia has been the principal supplier of imported beef into the US market, at times surging past 400,000t/year. Last year’s tally fell just short of that, at 395,000t.

But as the graph above produced by Elders economist Richard Koch shows, Brazil’s volumes (dark red) have surged sharply this year. The enormous spike in January is attributed to one single factor: Brazil exports to the US under the tiny 65,000t MFN quota, meaning there was a mad rush in January to get tariff-free product into the country before the quota filled. As reported earlier on Beef Central Brazil in fact filled its entire 2025 calendar quota in just 17 days back in January.

It means that for the final 11 months of 2025, Brazilian beef entering the US is exposed to an out-of-quota tariff of 26.4 percent on all beef shipments. On top of that, the US’s new 10pc reciprocal tariff means all Brazilian beef hitting the market is exposed to a total tariff of 36.4pc.

China remains Brazil’s main export destination for beef products, taking around 45pc of all shipments by volume, but the growing shortage of cattle in the US has boosted demand for beef imports, including those from both Brazil and Australia.

In contrast, Australia benefits from a massive 448,000t tariff-free quota with the US for 2025, negotiated under the 2005 US-Australia Free Trade Agreement. While there is a possibility that volume will be exceeded this year, it won’t be until the final month or two, at worst.

Australia, of course, is still subject to the 10pc reciprocal tariff imposed by the US on all trading partners since mid-April, but that is still a vast distance away from the 36.4pc that Brazilian beef current incurs.

Who’s using Brazilian beef in the US?

So who is using all this Brazilian beef now flooding into the US?

Very little, if any of it is being seen in the US retail (supermarket) segment, export trade sources suggest.

Nor do the large national burger chains like McDonald’s use South American product, electing to source exclusively from Australian and New Zealand imported beef. That’s being challenged somewhat this year by sharply lower NZ beef production.

However there is a vast legion of smaller burger and other fast food chains and value-added product manufacturers across the US that are now clearly happy to use Brazilian beef, to rein-in costs. There are literally dozens of smaller and niche US burger chains with anywhere from 50-200 outlets nationwide. The popular Five Guys burger chain, for example, has 1800 outlets, mostly in North America but also in Europe, Australia and elsewhere.

The big surge in Brazilian beef trade this year does not appear to have come at the expense of Australian exports, but in addition to – again, reflecting the state of US domestic beef production, and a surprising rise in US beef consumption being seen this year. US columnist Steve Kay will touch on this topic in his upcoming monthly column for Beef Central.

Australia’s own exports to the US in April were still near record highs at 37,200t, followed by May exports at 38,431t, up 23pc on the same time last year. While still well short of the recent-era monthly record of 47,000t set in October, May was still a very large volume month, by any standards. It also suggests that the 10pc additional tariff imposed under Trump’s ‘retaliatory’ measures back on 10 April has had virtually zero impact on Australian beef exports to the US, so far.

As US packers struggle with record high cattle prices and compressed margins, the May weekly period saw US fed cattle slaughter (everything bar non-fed cows and bulls) down 113,000 head or 7.5pc lower than the same period two years ago, and domestic cow/bull slaughter (manufacturing meat) down 9pc from the already low levels of last year, and 33pc lower than two years ago.

Commodity versus premium challenge

The surge in import trade out of Brazil into the US was a worrying development, given that Australia currently enjoys a 26.3pc tariff advantage over Brazilian beef into the US, Elders analyst Richard Koch said.

“Additionally, South American beef trades at a US9-10c/lb discount to Australian product in the market, indicating that they have a significant cost advantage over Australian beef (mostly from lower land values and labour costs),” he said.

Recently, Brazil was declared FMD vaccination free by the WHO which paved the way for Brazil to access valuable North Asian beef markets that the country had been previously excluded from on FMD grounds.

“Interestingly Japan has one of the largest Brazilian expat populations in the world, and there is a real push to provide access for Brazilian beef into Japan, with Korea most likely to follow Japan’s lead if they grant access,” Mr Koch said.

Japan is expected to send a technical mission to Brazil within the next 60 days to inspect the country’s sanitary system and beef processing plants.

With western economies under pressure to restructure budgets and reduce the cost-of-living burden on lower to middle classes, the heavy subsidisation of inefficient agricultural industries could be a luxury they cannot afford, Mr Koch said.

Currently, the EU is negotiating a trade deal with Mercosur (a trade block including the largest south American economies) which would see its agricultural products granted increased access to EU markets, placing further pressure on the EU agricultural sector that is already feeling the squeeze from lower cost Black Sea grain in its traditional north African markets.

In North America, grain farmers are feeling the squeeze from increased South American corn and soybean production, asking Trump to increase subsidies or increase bio-fuel mandates (a form of quasi-subsidisation) to help offset lower prices and forecasts for increased stocks.

“So are we in the process of seeing agricultural production shift from high-cost producers that have been shielded by subsidies, to lower cost producers as trade relationships become more fluid?” Mr Koch asked.

Australia’s commitment to moving its industry from a commodity supplier to a reliable and consistent supplier of high-quality product backed by world leading food safety standards should help it withstand the entry of lower-cost suppliers, although like in the case of grain, our prices may be not immune to the effects of increased competition, he said.

US-China trade talks

While all the above is of material importance for Australian beef, much could change if any progress is made in US-China trade talks being staged in London this week.

Day two of the talks has just wrapped up, with little progress or result to report, at this stage, however US Commerce Secretary Howard Lutnick gave positive reports to media on his way into meetings yesterday.

Local UK wire services this afternoon reported that both parties had a greed to a ‘framework’ agreement aimed at de-escalating tensions between the two. While the specifics of the framework have not been made known, any agreement still requires approval by US President Donald Trump and Chinese President Xi Jinping. The pair held a 90-minute phone call on trade last week.