July 24, 2006

By drawing Uruguayan supplies of beef away from the US market, Russia has given support to beef prices in the US market, according to Meat and Livestock Australia (MLA).

Significantly increased amounts of Uruguayan frozen boneless beef to Russia was a major factor in reducing the supply of imported beef to the US market.

The US share of Uruguayan frozen boneless beef exports plunged to just 26 percent in June, from 79 percent the same month last year.

Although US imports have fallen 40 percent to 7000 tonnes, the fall is compensated by Russia's imports of Uruguayan beef, which had increased 12 fold to 13,602 tonnes, making it the top market for the product.

Underlying Russia's increased Uruguayan imports was the fact that exports from Russia's traditional suppliers, Brazil and Argentina, have been decimated, the former by a foot-and-mouth disease ban and the latter by a self-imposed ban.

Tight supplies have created higher prices for Uruguayan beef in Russia. To add fuel to the fire, Uruguayan beef producers can also be free from the high tariffs imposed by US authorities by shifting supplies to Russia, thus creating more incentives for Uruguayan beef producers to switch markets.

Through mainly increased demand in Russia, Uruguayan frozen boneless beef exports in June were 17 percent higher than June last year, according to the World Beef Report.