A DOWNWARD trend in Brazil’s cattle cycle, due to reduced profitability for store producers in recent years, has reduced cattle supplies, and the strong domestic market has responded with sharp price increases.
The loss of the EU export market also contributed to an 18% reduction in cattle disposals for the first quarter of 2008.
Figures for March were more than 25% lower than 2007, and this market trend of scarcity is expected to continue into 2009.
Steer prices in the Sao Paulo market to date are 46% higher than last year, and rising.
Cattle eligible for the limited exports which have resumed to the EU command a price premium of at least 15%.
The EU demands disease-free cattle must be located in a foot-and-mouth-free state for 90 days before slaughter in a facility approved by the EU, and only matured and de-boned meat is allowed.
Brazil alleges these the rules are an unfair barrier to free trade and has warned it may file a complaint against the EU at the World Trade Organisation.
Even without the EU restriction, lower availability, higher cattle prices, and the appreciation of the Brazilian currency have reduced the competitive presence of Brazilian beef exports, which were 23% lower for the first four months this year.
Exports to the EU were reduced 45% this year to the end of April.
Shipments fell by 28% to Russia and by more than 50% to Egypt.
However trade to Russia has been increasing steadily since April.
Brazilian Agriculture Secretary Reinhold Stephanes has predicted re-opening of new export markets after the World Organisation for Animal Health (OIE) last week declared 11 Brazilian regions free of foot-and-mouth disease, with vaccination — nearly three years after outbreaks in the states of Mato Grosso do Sul and Parana.
Parana has regained FMD-free with vaccination status, but OIE has requested additional Mato Grosso do Sul information.
* Beef supplies have also fallen from the other big south American producer, Argentina. Their production from January to April 2008 was down by 11% compared to 2007, and by more than one third in March and April, due to a farmers’ strike.
The farmer protests and government imposed export bans have left Argentina’s beef supply for the rest of 2008 uncertain.
However, trade to the EU was up 9% in the first quarter, compared to 2007.
* Argentina’s exports of 84,000 tonnes in January, February and March were exceeded by Uruguay’s trade of 97,500 tonnes in the first four months.
This included 25,000 tonnes to the EU, after strong increases in shipments to Holland, Britian, Italy and Spain, compared to Brazil’s 57,000 tonnes.
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