According to a press release by Rabobank, a multinational banking firm, South American beef exports are set to increase by 11% in 2016. The increase is mainly due to favorable currency values, along with improved access to importing countries, and increased the availability of beef.
This is in contrast to Brazil's, a major beef exporting country, current economic situation. The purchasing power of the general population is currently weak while local beef prices remain high.
"Brazil, the largest Latin American beef producer, is expected to see reduced local consumption and gains in export access, which, in combination, will lead to more exports," according to Angus Gidley-Baird, a Senior Animal Protein Analyst at Rabobank. "Domestically, Brazil is in a complex situation, with high inflation and a rising unemployment rate producing what some describe as the most serious economic crisis the country has ever faced."
In the supply aspect, cattle farmers and producers are encouraged to maintain their herd instead of sending them for slaughter. This is due to high calf prices mainly caused by low calf availability.
Furthermore, the weak Brazilian real (the country's currency), has made the country's beef more competitive in the international market. However, this has brought repercussions to the local market - domestic beef prices are high. This, in turn, led the local population to resort to eating other forms of meat, freeing up more beef for exports.
Other key takeaways from the report include the following:
- China's beef imports are continually increasing, despite a slowdown in its economy. It's beef imports increased by 60% in 2015, reaching over 473,000 tons.
- Australian beef production is expected to remain low in the first half of 2016. This is mainly due to its supply drying up.
- The US Department of Agriculture's report released last February forecasted that US imports of beef and veal will drop by 24%, approximately to 900,000 tons.
