August 3, 2009

Argentina's beef production and cattle slaughter in the first half of 2009 reached record levels, thanks to continuing herd liquidation, according to the Argentinean Beef Industry Trade Chamber (CICCRA).

Farmers are liquidating their herds as they prepare to leave the industry which is tied down by restrictive government policies, the severe drought and increased feedlot marketings.

In the first half of 2009, cattle slaughter reached eight million head, up 18 percent on-year. Production is estimated to have increased by the same rate, totalling 1.7 million tonnes cwt year-on-year.

The increased supply boosted exports by 63 percent on-year to 162,336 tonnes swt in the calendar year to June. However, total revenues increased only 20 percent as prices have declined 25 percent to US$4,133 per tonne due to the global drop in beef export prices.

CICCRA said the current slaughter rate is worrying and unsustainable, as female cattle accounts for about half of total slaughter, hampering the breeding stock and weakening future calf production capacity.

In addition, the government support given to lotfeeders for production of light animals for the domestic market has boosted the slaughter rate of young animals, further pressurising total cattle numbers. It is estimated that the herd has contracted five percent this year.

While the high slaughter rates have boosted beef supplies, it is expected that by 2010 the situation will have reversed, increasing domestic beef prices and reducing exports.