December 8, 2008

Brazil's beef herd rebuilding may be longer

Brazil will try to shore up its decreasing beef herd but may take longer due to the financial crisis which pulled down prices and farmers' profitability.

The decline of Brazilian beef herd which started in 2005 has been continuous due to low prices which fuelled the high slaughter of female cattle. 

It was initially expected that the herd would be reconstructed in late 2010, but this could take even longer if the industry's profitability is affected as a result of lower exports (which in November fell to the lowest level since February 2004) and domestic prices, and slowing demand.

Over the last few years, global demand and a domestic market with high purchasing power increased demand for Brazilian beef, and slaughterhouses responded by increasing their capacity. As a result, supply eventually tightened and prices experienced a sustained increase (both in US$ and local currency terms) since late 2006, especially for calves, stimulating producers to rebuild herds.

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