September 3, 2004

Argentine 2005 Beef Exports Seen At 600,000 MT

Argentine beef exports for 2005 are projected at 600,000 metric tons, the highest since 1980, according to information from the U.S. Department of Agriculture's Foreign Agricultural Service web site, dated Aug. 1 and released Thursday.
 
Argentine beef exports for 2005 are forecast at 600,000 metric tons, the highest in the past 25 years. This is a result of several factors, but primarily because of an extraordinary strong international demand, good profitability and the opening of new markets, the report said.
 
After the devaluation in early 2002, Argentine products became very competitive in the world market. Despite increased costs in the past 2-3 years, exporters and meat packers continue to be profitable. While cattle prices tripled in pesos after the devaluation, labor, services, utilities, packaging, etc. have increased and are expected to continue to do so at a slower pace in 2005. The local cattle/beef sector is in a healthy economic condition.
 
Moreover, exporting plants are expected to continue enjoying firm international beef prices throughout 2005. Argentine average FOB prices in the first semester of 2004 increased about 25%.
 
The Argentine Government (GOA) continues to work hard in opening new markets which closed in the last few years because of the foot and mouth disease crisis. With the compulsory vaccination, the disease has been controlled. The last outbreak was in September 2003, and discovered in a few pigs owned by a very small producer in the northern part of Salta province, close to the Argentine border with Bolivia.
 
The International Office of Epizootics (OIE) is expected to declare Argentina free of FMD with vaccination by the end of 2004. In May 2004, the OIE declared Argentina provisionally free of BSE. This provides the country strong advantages in markets which are very susceptible to this disease. By mid-2004 there were more than 80 markets open to Argentine fresh beef and a few more are expected to be added to the list in 2005.
 
The recovery of the world beef market in 2004 (and projected for 2005) had a positive impact on the local livestock sector, the report said. Our previous export projection for 2004 was significantly lower than post's current 540,000 tons. The BSE outbreak in the U.S. had just been announced, with many analysts predicting an important drop in consumption in that country. But demand had expanded quite vigorously. The very low level of beef stocks in the EU as well as the problems of supplying many neighbouring markets also opened unexpected opportunities for Argentina.
 
Argentine beef exports consist primarily of boneless fresh and frozen beef and processed products. In the past several months, shipments of boneless frozen beef have increased dramatically, especially due to low-price markets. This trend is expected to continue until the opening of the U.S. and Canadian markets, which demand large volumes of trimmings, but pay higher prices. Local exporters hope to see these two major markets open in early 2006.
 
The main export markets in 2005 will be the EU, the U.S. (for cooked meat), Russia, Israel, Chile, and Venezuela.