January 18, 2010

Brazil beef exports down 9% in 2009

Beef exports by Brazil in 2009 declined 9% on-year to 926,082 tonnes swt, with a larger average price fall of 17% to US$3,264 per tonne.

Russia remained Brazil's main destination, despite falling 14% to 327,221 tonnes swt, given the ongoing tough financial situation since late 2008.

The Middle East followed Russia, taking 24% of the total with 223,329 tonnes swt. The third largest was Hong Kong, which grew 56% to 100,996 tonnes swt, taking 11% of the total.

The fall in export volumes is a result of weaker demand in Brazil's available markets, accompanied by the rapid appreciation of the real during the year - which made Brazilian product more expensive in its main and price sensitive destinations, such as Russia. In addition, Brazil's economic growth has sustained the domestic market's purchasing power, fuelling the redirection of product to local consumers.

With a 15% decrease in average live cattle prices during 2009, cattle slaughter during the calendar year to September was down 6%. Prices remain historically high - up 27% on 2007 and 64% on 2006 in US¢ terms.

The local industry expects beef exports to recover slowly, only returning to 2008 levels this year, given the expectations of a high real due to the increasing inflows of US dollars into the country. Hence, volumes are expected to recover faster than prices.

In addition, Rabobank expects the consolidation process in the meat industry to continue, with companies diversifying into other proteins to attain higher margins.