July 7, 2009

Brazil's beef exports continue their decline, with January through May export volumes down nearly 17 percent to 436,525 tonnes compared to last year.

The average export value per kilogramme was down 14.5 percent to US$3.11, meaning the total export value declined by nearly 29 percent to US$1.36 billion.

Exports to Russia, their largest market, were down 23 percent to 127,094 tonnes while exports to their second-largest market, the Middle East, were up slightly to 87,338 tonnes, led by growing demand from Egypt.

Exports to Europe were down 28 percent to 46,910 tonnes while exports to Hong Kong are nearing the volume to Europe, up 29 percent to 42,218 tonnes.

Russia continues to account for about 30 percent of Brazil's beef export volume while the EU share has fallen from 20 percent in 2007 to about 10 percent in 2009. In US dollar terms, carcass equivalent prices for Brazilian beef are still about 20-percent lower than last year.

Brazil's 2009 pork exports are up 8 percent to 217,440 tonnes, valued at US$450 million, a decrease of 16 percent.

The drop in value of both beef and pork exports is partially related to the devaluation of the Brazilian real compared to early 2008.

Exports to Russia, also the top destination for Brazilian pork, increased by 20 percent to 111,796 tonnes and accounted for over half of Brazil's export volume. Hong Kong is also a growth market for Brazilian pork, with exports up 20 percent to 41,518 tonnes.

On June 22, 2009, the 2009-10 Agriculture and Livestock Plan (PAP) allocated US$53.7 billion, 37-percent more than last year, to finance production costs, marketing and investment for the October 2009 through September 2010 crop year, while US$46 billion is allocated to commercial and export-oriented agriculture and the remaining to family operations.

While a weak real supports Brazil's exports, the stronger real aids Brazilian purchasing power and could fuel further restructuring in the Brazilian meat industry.

The recent merger of Sadia and Perdigao is now followed by rumours of a merger between Bertin and Marfrig. At the same time, Marfrig has announced plans to increase pork production and has acquired Doux Frangosul's turkey production assets in Brazil.