South America’s major beef-exporting countries are capitalizing on strong demand from a variety of global markets. The following article highlights 2013 export results and trends for Uruguay, Brazil and Paraguay.
Despite September slump, Uruguay’s exports higher year-to-date
Constrained by seasonally low slaughter numbers, Uruguay’s September beef/beef variety meat exports slipped to 18,494 mt – the lowest monthly volume in nearly two years. Exports to China remained a bright spot, however, as China continues to be Uruguay’s dominant destination for frozen beef shipments. In September, frozen exports to China reached 6,000 mt and accounted for 47.5 percent of Uruguay’s frozen export total.
For January through September, Uruguay’s total beef/bvm exports were still 3 percent above last year’s pace at 216,765 mt. Exports to China reached 52,135 mt, which equates to 34 percent of Uruguay’s total frozen export volume (153,661 mt, +1 percent). Frozen exports also increased to the United States (17,747, +19 percent) and Canada (8,367 mt, +5 percent) but were lower to Russia (21,904 mt, -60 percent), Israel (18,099 mt, -15 percent) and the EU (15,865 mt, -20 percent). Exports to the United States will likely slow significantly in the fourth quarter, as Uruguay has essentially utilized its full tariff rate quota (TRQ) for exports to the U.S.
Despite larger chilled shipments to the EU (14,663 mt, +28 percent), Uruguay’s chilled beef exports through September were down 3 percent from a year ago to 30,715 mt. Larger exports to the EU were offset by a decrease to Chile (7,819 mt, -32 percent) and smaller volumes to Brazil. Uruguay continues to ship more grain-fed beef to the EU under the duty-free quota, which has contributed to its increase in chilled exports to that market.
Uruguay’s cattle slaughter through September was 1.56 million head, down 1 percent from a year ago. The decline is due to scarce supplies, though availability has improved in October. Cattle prices in early October were $3.42/kg, down 9 percent from last year and 8 percent lower than the most recent peak in early August. Lower prices partially reflect the weaker currency, which is down 5 percent year-over-year against the U.S. dollar.
Brazil’s September exports largest in six years
Last month Brazil exported its largest monthly volume of fresh beef since May 2007, according to Brazilian´s Secretary of Commerce for International Trade. September exports totaled 112,140 mt, commanding an average FOB price of $4,476/mt. The increase was driven in part by a sharp devaluation of the Brazilian real, which strengthened against the U.S. dollar in late September and early October.
The September performance is not yet reflected in Brazil’s Global Trade Atlas export data, which is only available through August. For the first eight months of 2013, Brazil’s beef/bvm exports totaled 894,890 mt, up 22 percent from a year ago. Export value was up 15 percent to $3.96 billion, though on a per-unit basis export value actually declined by about 6 percent.
Russia is Brazil’s leading volume market (207,360 mt, +14 percent) and second to Hong Kong in value ($807.3 million, +20 percent). Exports to Russia will likely slow in the fourth quarter, however, as recent plant delistings – which took effect Oct. 2 – reduced the number of beef plants eligible to export to Russia from 23 to 14.
Exports to Hong Kong nearly doubled in volume to 203,869 mt (+94 percent), while increasing 107 percent in value to $823.2 million. Brazil’s volume to Egypt increased (85,367 mt, +4 percent) but exports declined in value ($282.2 million, -13 percent). Exports to Venezuela surged 60 percent in volume (79,744 mt) and 75 percent in value ($431.8 million).
Paraguay’s exports record-large, more diversified
Paraguay’s beef/beef variety meat exports are on a record pace through September, increasing 31 percent from a year ago to 194,091 mt. Last year Paraguay’s exports quickly rebounded from the fall 2011 FMD outbreak, but 74 percent of its 2012 exports were to Russia. While exports to Russia (111,788 mt, +1.5 percent) still account for 58 percent of the total volume, Paraguay’s exports gradually diversified this year as shipments increased to Brazil (16,082 mt, +7 percent), Israel (12,643 mt, +388 percent), Hong Kong (12,409 mt, +142 percent) and Georgia (7,121 mt, +299 percent).
Exports to Chile totaled 12,488 mt – up from zero a year ago, but still 74 percent below the 2011 pace. Paraguayan exports to Chile have taken longer to recover than to other leading markets, but gained significant momentum in August (3,976 mt) and September (3,191 mt). These results were still well below the pre-FMD levels of 2011, however, when August and September exports to Chile were 6,663 mt and 4,136 mt, respectively.
Chile’s closure to Paraguayan beef bolstered opportunities for U.S. exports to this growing market, but so far Paraguay’s reentry into the Chilean market has not slowed the momentum for U.S. beef. Chilean import data through July showed a further increase in U.S. market share (8 percent, compared to 7.2 percent in 2012) and a 29 percent increase in U.S. volume (to 6,499 mt).
Paraguay’s beef carcass prices plummeted following the FMD finding and took a full year to show signs of recovery. Prices are now trending higher ($3.15/kg, +6 percent from last year), approaching Brazil’s prices and already above Australia’s. This upward trend is driven by strong exports and seasonally tight slaughter cattle supplies throughout South America. A comparison of this region’s carcass price trends with those in the United States and Australia is captured in the chart on the left.
Article sources: World Beef Report, Uruguay’s National Meat Institute, Global Trade Atlas