August 23, 2020

Australian exporters take notice of increasing South American beef products on US market

South American countries are slowly posing as competitors to Australian and New Zealand beef on the US market, and traders from the latter countries are flashing some kind of alarm, according to a Beef Central report.

"South American volumes are coming off a low base, tonnage-wise, which is why the trend looks a bit startling. But it's fair to say that we are not used to competition in the US imported beef market from this region", an Australian export trader was quoted as saying on Monday, Aug. 17.

A trade source in the report said that "[i]n a big year, Brazil could easily put 40,000 to 50,000 tonnes into the US" out of the annual 60,000-tonne quota for "other countries", under which Brazil currently exports to the US. The source added, though, that Brazil is heavily focussed on the China market.

The report also cited speculations that Argentina may fill its 20,000-tonne US beef quota this year for the first time.

The report said one key reason why Brazil sells much of its beef to China is its lack of access to alternate higher-paying volume markets such as Japan, Korea and the US.

It was noted, though, that more meat plants in South America are being approved to supply the US market. For example, another three large JBS plants in Brazil and Argentina were recently approved to service the Burger King chain in the US, the Central Beef report said.

"All of that is adding momentum to South American beef supply into the US," an Australian trade source said in the report.

The source added, "At a US 15-17 cent/lb discount to equivalent Australian manufacturing beef at present, there are more US end-users electing to adopt South American product for the first time—they feel they have to do it."

At the current price levels, South American beef products will continue to compete with Australian imports, although in terms of hygiene and reliability of shipping, Australia still maintains a distinctive advantage in the US market, as per report.