August 9, 2010

World beef prices up on tight South American supplies

The tight cattle supply situation among South American exporters has forced major importers to lift beef prices in recent weeks, according to World Beef Report.

While Argentina continues to feel the impact of herd liquidation and drought, with a slump in beef production and exports restrictions, Brazil is currently undergoing the winter off season, with market expectations for a slight increase in supply around October.

Although Brazil's exports in July increased, short supply, high domestic demand and the strong currency pulled up average export prices 19% on-year, to US$4,011/tonne.

In addition, the 2008-09 drought and cattle producer's needs to increase cash flows with higher cow turnoff has left Uruguay with tight beef supplies, with production forecast to decline in late 2010 and into 2011. The reduced beef production in the past month resulted in Uruguayan exports for July falling 29% on the previous month to 16,150 tonnes swt-25% lower compared with July 2009, with a 20% on-year rise in average export values.

Uruguay's average exports prices to Russia rose 26% on-month, to US$3,298/tonne, while prices to the EU rose 4%, to US$6,752/tonne.