Brazil beef exports decrease in 2008; first time in a decade

The decrease of Brazil's beef exports in 2008 is the first time in ten years after posting a tenfold increase over that period to peak at 2.49 million tonnes in 2007.

 

The decline is due to changes in both production and consumption in Brazil.

 

Production peaked at an estimated 9.6 million tonnes in 2006, nearly double the level of 5.2 million that prevailed throughout the mid-1990s.

 

Local consumption has also increased over the period to an estimated 6.25 million tonnes in 2008, up from 4.8 million a decade ago, and accounts for 80 percent of production.

 

Improvement in the Brazilian economy by 5.5 percent in 2008 has fuelled consumption last year and growth is seen to sustain by 4 percent this year. The national herd peaked in 2007 at 180 million and the most optimistic forecasts are that it may recover to that level again by mid-2010 at the earliest.

 

 

Brickley, writing in Bord Bia's market monitor, said a recent report by Rabobank suggests that the reduced availability of trade finance, together with a slowing meat demand, is having a strong impact on global trade.

 

Noting Rabobank's observations, Brickley said while Brazil has been able to expand its total meat exports for many years, they recorded a drop of 20 percent in trade on a monthly basis in December 2008 relative to August.

 

Beef and pork exports have shown the strongest decline at 30 percent and 35 percent respectively. This sharp slowdown in exports is impacting strongly on the financial performance of Brazilian processors. This follows a number of years of strong profitability due to higher prices, which, combined with significant borrowing, saw much overseas expansion by Brazilian processors.

 

However, the Rabobank also suggest that a number of international investment firms are downgrading the sector's rating due to pressure on exports, which has seen the fifth largest processor, Independencia, file for bankruptcy over the last week, Brickley said.

 

This follows a number of years of strong profitability due to higher prices, which, combined with significant borrowing, saw much overseas expansion by Brazilian processors, he concluded.