February 9, 2004

 

 

Argentine 2004 Beef Exports Estimated At 420,000 MT

 

Argentine beef exports for 2004 are forecast at 420,000 metric tons, larger than previously projected, according to a U.S. Department of Agriculture attache posted on the Foreign Agricultural Service Web site.

 

Argentine beef exports for 2004 are forecast at 420,000 metric tons, larger than previously projected. Local traders found in the latter part of 2003 a stronger world market, with increased opportunities and prices. Low meat stocks in the European Union E.U.) and the fact that Brazilian FOB prices are increasing open up better opportunities for Argentine beef. It appears that the BSE situation in the United States will not have strong negative effect as most traders had initially feared.

 

Exports of frozen beef are expected to continue to increase in 2004. Russia, Algeria, Israel, and Bulgaria accounted for 70 percent of Argentina's 2003 exports, which totaled about 105,000 tons (product weight). Traders also expect slightly higher shipments of processed beef products, as long as the BSE situation stays under control and beef consumption remains steady in the United States. Exports of fresh boneless beef, which totaled almost 70,000 tons (product weight) in 2003, are also forecast to expand somewhat, especially with the reopening in March 2004 of the key Chilean market.

 

Meat exporters forecast prices to remain stable or increase slightly in 2004. Although Argentine average FOB beef prices during 2003 improved, they are still much lower than a few years ago.

 

Although Argentina is free of BSE, it has not been able to capitalize on the problem of the BSE in the United States due to its status of foot and mouth disease. Markets like Japan, Korea and Mexico are closed to Argentine fresh beef. Argentina has made good progress in controlling FMD in the past few years. However, in late August 2003, there was a case detected in a small, remote hog farm in the northern part of Salta province. An APHIS team, which was about to come down to initiate a risk assessment to allow the re-entry of boneless fresh beef from Argentina, was postponed. This means that Argentina will not be able to export fresh beef into the United States until the risk assessment is successfully completed and USG agencies provide final clearance. Several markets closed down right after the announcement of the outbreak, but since then, most have reopened. As mentioned above, Chile is still closed and exporters are looking forward to its reopening in next March.

 

Cattle slaughter in 2004 is reduced to 12.4 million head, slightly down from our previous forecast, with a total beef output of 2.65 million tons. This reduction is a consequence of a larger, forced slaughter in 2003 as result of a very dry and harsh winter (and the first part of spring) in several cattle producing regions of the country. Many producers had to market their cattle in advance. A record number of cattle were fattened in feedlots as many producers ran out of pastures and feed. Cattle finished in confinement are usually much younger and lighter than the average.

 

Some sources estimate that about 400,000 head of cattle died in 2003 as result of the drought. However, its real impact will be felt in 2004 and 2005. The 2004 calf crop (July- October) will be smaller as pregnancy rates are feared to be very poor. Therefore, the number of cattle available for slaughter in 2005 will also suffer a reduction. Strong world prices for grains and oilseeds continue to put pressure on the cattle sector in Argentina. Many producers continue to put into crop production pastures devoted to cattle. Due to this, plus serious weather problems in the past couple of years (floods and then drought) the area of alfalfa pastures has been reduced by one third. Sources estimate that the area left with alfalfa is approximately 3.2 million hectares. This situation is forcing feeders to use more grains, which are normally supplied to the cattle in the last three months prior to marketing.

 

Cattle prices in 2004 are forecast to increase as a limited cattle supply, stronger consumer demand and better export prospects could drive prices over 2.0 pesos per kilo (US$0.70 per kilo).

 

Despite the fact that retail beef prices have increased 80 percent since the peso devaluation in early 2002, domestic beef consumption was quite strong in 2003 and it is expected to continue that way in 2004. Salaries are expected to continue to increase, especially for workers at the lower end of the pay scale, who are normally the largest beef consumers.

 

Economic growth and lower unemployment should also add to a firm consumption.

 

The Argentine Government is working on a national cattle program with the objective of expanding production and encouraging higher export surpluses. There is little information available so far, but this would be one of the first government active policies to promote cattle production in the past several years. The National Beef Promotion Institute has recently started operating. Producers and packers fund its budget with payments of pesos $0.43 and pesos $0.19 respectively, per slaughtered animal. The Institute participated in the Anuga food show in Germany in 2003 and launched a domestic campaign to support consumption during New Years festivities.