South America is expected to be the major beneficiary, while Canada eyes increased shipments to the United States
South America is poised to increase its beef exports by 11 percent with more product probably going to China, said Rabobank in its quarterly beef report.
China has had a major impact on the world beef trade.
The country imported 473,000 tonnes of fresh and frozen beef last year as well as offal products. It is granting more access to more countries, so imports are expected to increase again this year.
The Brazilian Beef Exporters Association said Brazil exported more than 1.3 million tonnes of beef worth more than US$5 billion. The Chinese trade was worth $400 million.
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This is happening while Brazil is in the midst of an economic slowdown. Gross domestic product fell by four percent in 2015, followed by a further decline of three percent this year.
Local beef prices remain high and Brazilians have declining purchasing power, but some herd expansion is underway. The national herd is 205 million head, and the country slaughters 40 million a year.
Brazil is expected to export more than 1.2 million tonnes of beef this year., Rabobank said in its report.
It joins Australia, United States and India as countries that export more than a million tonnes per year.
Uruguay, Argentina and Paraguay are also expected to increase exports.
Argentina was subject to a 15 percent export tax from 2003-15. Producers responded by reducing their herds, but the country’s beef exports should be 300,000 tonnes this year, which is a 30 percent increase from last year, said Rabobank.
Other countries are also active in the beef trade.
New Zealand exported 449,836 tonnes last year. About half went to the U.S., 17 percent to China and the rest to other customers.
Canada shipped 375,000 tonnes last year, making it the seventh largest exporter in the world.
The industry is worth more than $16 billion a year, and the beef herd size is stable.
“Given the removal of COOL (country-of-origin labelling on cattle and beef shipped to the U.S.) and the increased slaughter rates, increased shipments of Canadian beef into the U.S. as well as other export destinations are expected,” said the report.
Live exports had previously removed a lot of cattle from Canada, but that has slowed. Thirty-five percent of the live exports were feeders, but more are now staying here and are being finished and slaughtered domestically.
Brian Perillat of Canfax said feeder exports are down 75 percent: 5,000 to 7,000 head a week this year from 16,000 to 18,000 head a week last year.
“They are just at a crawl this year,” he said.
Fed cattle exports are down 35 percent while cows and bulls are down 15 percent, but exports may pick up later in the year.
A weaker Canadian dollar does not make much difference.
“The dollar doesn’t encourage exports. It impacts our prices, but it doesn’t affect the flows,” he said.
Canada also imports beef: more than 203,984 tonnes last year valued at $1.6 billion, according to the Canadian Meat Council.
The country approved Argentine sales last fall, but it depends what buyers want, said John Masswohl of the Canadian Cattlemen’s Association.
Brazil is also seeking approval to enter Canada and the U.S., but governments have been careful about granting access because of past outbreaks of foot-and-mouth disease.
Getting into Canada is not that easy.
“As additional countries get ap-proved to export to Canada, they have to compete for the existing duty-free quota,” Masswohl said.
An annual beef and veal tariff rate quota of 76,409 tonnes is offered annually to countries that do not have a free trade agreement with Canada.
Australia typically gets 35,000 tonnes and New Zealand receives 29,500 tonnes. The remaining 11,809 tonnes are open to all other countries.
The tariff is 26.5 percent if they go over the quota.
Nearly all the quota went to Uruguay when it opened at the beginning of this year, while 411 tonnes went to the United Kingdom and one tonne went to Japan.
barbara.duckworth@producer.com
