September 20, 2010

Argentinean cattle prices to rise amid tight supplies

Despite soaring in early 2010 and experiencing a slight slowdown in recent months, Argentinean cattle prices are expected to resume rising again, said Infocampo.

The anticipated rise in prices is based upon reports that very few forward contracts for calf restockers have been taken up, as breeders expect prices to increase further.

This is expected to see producers selling animals during early 2011 when prices are expected to peak. Currently, only producers reportedly in need of cash have locked into forward contracts.

The recent fall in prices has resulted from easing demand, triggered by the closure of several plants, with most other plants operating at low capacity. This has been matched by a small slowdown in domestic and export demand.

However, supplies are expected to decrease further with feedlots replacing only around 70% of the cattle they have marketed – a consequence of the extremely high young cattle costs.

In addition, anticipated drought conditions as a result of the "La Niña" phenomenon is expected to hamper the weight gain of adult animals and the recovery in young cattle numbers, with calving rates also likely to be impacted.

In the short term, scarce export heavy steer supplies are expected to result in further price rises, as "Hilton" high quality beef demand to the EU increases, with the quota already distributed among local exporters.

Recent studies have estimated that it will take around 10 years for the local herd to recover from the 8.6 million head fall since 2007, when cattle numbers totalled 57.6 million head.