March 20, 2008

EU beef prices to rise as consumption, exports dwindle
 

Limited cattle supplies and reduced imports from Brazil will cause prices of beef in the EU to rise this year while consumption and exports drop, the USDA said.

In 2007, EU beef production has increased marginally due to higher slaughter weight in France, Germany, the UK and Ireland along with increased slaughter in the new member states, mainly Romania and Bulgaria. This small growth temporarily relieved the tight beef supply in the EU.

Even as the EU's beef imports grew by about 80,000 tonnes in 2007, the increase was offset by a decline of about 120,000 tonnes in Bulgaria and Romania's beef imports, as these new member states enforced the EU import regime. The EU's imports of Brazilian beef went down from 533,000 tonnes in 2006 to about 445,000 tonnes in 2007.

Should 100 to 700 farms in Brazil regain their eligibility to export to the EU, the USDA predicts that imports of Brazilian beef will only be a fraction of the trade volume reached in 2007.

The decrease in demand caused by higher prices and the lack of any other producer who can sufficiently supply beef products, EU importers do not expect the trade volume to reach 2007 levels, even if all Brazilian farms were re-certified.

The EU's beef exports declined by a third last year due to tight supply, the high Euro/US dollar exchange rate and export refund reductions. Its beef exports to Russia went down by over 50 percent in 2007, and were replaced by Brazilian beef.

The tight supply of beef and high domestic prices may lead to a further decline in exports this year, said the USDA. Increased prices may also significantly ease consumption throughout the EU, it added.