September 3, 2009

Despite variations in the prospects for the Brazilian, Argentine and Uruguayan herds, the overall cattle inventory from these three main South American exporters is expected to grow only 0.2 percent in 2009 to 237 million heads.

The Brazilian herd is estimated to reach 173 million head this year, a two-percent increase on 2008, after falling from 2005 to 2007 when low cattle prices and profitability and increased export demand led to high slaughter rates, especially of female cattle. Producers are currently rebuilding the herd and retaining females. Cattle supply is forecast to improve in 2010-11, later than initially expected as the financial crisis has caused cattle prices to fall.

In contrast, cattle from Argentina and Uruguay are expected to drop this year due to a severe drought that hampered pastures and even jeopardised the availability of drinking water for cattle. The drought has caused calf production to drop and sent animals to slaughter as producers decreased load rates. The Uruguayan herd is forecast to fall 2 percent to 11.5 million head in 2009 and even further in 2010, as calve weaning is expected to fall 24 percent to 2.1 million head given the poor pregnancy rates of around 64 percent this season.

The Argentinean Beef Industry Trade Chamber has projected a 5 percent decrease of the local herd for this year and further falls in the long term. The drop has been partly fuelled by the drought, but is mostly the result of the ongoing government controls which have made producers liquidate cattle and exit the industry for other more profitable enterprises.