August 22, 2008

Brazilian fattened steers are no longer the most expensive in Mercosur, a South American trade block, as they begin to fall below values negotiated in the US.

Since October, the value of the 'arroba', a traditional 15-kilogramme measure of beef carcass, was higher in Brazil than in Uruguay – traditionally the most expensive in the region.

Recent price increases in Uruguay have been higher than Brazil's, and the exchange rates have affected the inversion of positions. Market analysts estimated that the difference continue for some time depending on fundamental and financial factors.

This week, the arroba in Brazil is sold at US$54.6 whereas it is at US$57.9 in Uruguay, with values based on the arroba price in Sao Paulo state.

During the 10 months in which Brazilian beef cost more than that of Mercosur neighbours, the greatest difference reached US$10 per arroba last December.

Since January, the quotation of Uruguay's beef cattle increased by 80 percent, twice as much as Brazil's growth, according to analyst Fabiano Tito Rosa.

The Mercosur is a Regional Trade Agreement (RTA) between Argentina, Brazil, Paraguay and Uruguay founded in 1991, with an aim to promote free trade and fluid movement of goods, people and currency.