Exports of beef from South America are to increase by 11% in 2016, according to the latest Rabobank Beef Quarterly.
Currency values, improved access to importing countries and increased availability of beef, are all factors Rabobank has attributed to the rise.
Angus Gidley-Baird, Senior Animal Protein Analyst at Rabobank said that Brazil, the largest Latin American beef producer, is expected to see reduced local consumption and gains in export access.
This will lead to more exports, the Animal Protein Analyst said.
According to 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.
While Brazilian consumers are seeing their purchasing power decline, local beef prices remain high.
Meanwhile on the supply side, Rabobank maintains that cattle producers have been encouraged to maintain cows in their herd rather than sending them to slaughter - a result of high calf prices driven by low calf availability.
Also, it says that the weaker currency has made Brazilian beef very competitive on international markets, and strong global demand has pushed local market prices higher.
Therefore, the resulting high domestic beef prices have pushed consumers towards cheaper competing proteins, such as poultry, freeing up additional beef for exports.
Global Beef Imports
The Global Beef Quarterly report found that despite a slowing economy, official Chinese imports of beef continue to increase.
China’s official beef imports surged by 60% year-on-year in 2015, reaching 473,000t, according to Rabobank.
With Australian beef production expected to remain low in the first half of 2016, supplies there are drying up.
Meanwhile, the USDA’s outlook report has forecast that US imports of beef and veal will drop by 24% to 900,000t.
Rabobank expects the EU beef market is expected to remain under slight pressure in the coming months, as EU beef production will continue to grow as a result of rising cow slaughter numbers.
Mercosur trade deal
Looking closer to home and the Minster for Agriculture, Simon Coveney has said that he has repeatedly raised Irish concerns at EU level in relation to the potentially serious impact that a Mercosur deal would have on the Irish and EU agriculture sector and, in particular, on the beef sector.
Responding to questioning on the issue in the Dail this week, he said the Commission’s own analysis of the worst case scenario would see production levels drop by some 150,000t, with the producer price for beef falling by as much as 8%.
Ireland, he said, is unique in that it exports over 90% of its beef production to the EU, and the entry of a very competitive player such as Mercosur would, therefore, have a potentially damaging impact on our market.
Meanwhile, Meat Industry Ireland has said that there is no benefit to the Irish agri-food sector from a trade deal between the EU and Mercosur countries (Brazil, Argentina, Uruguay and Paraguay) and any benefits to the wider economy are questionable.