QMS Market Report – February 2008

Not withstanding the restrictions placed on imports from Brazil by the EU during 2007, Brazil placed 1.285m tonnes of fresh and frozen beef on the global market during 2007 an increase of 5% on 2006, and accounting for 27% of domestic production.

Within this total, the EU took 40% less than a year ago while deliveries to Russia increased by 40%. More beef was also supplied by Brazil to Iran, Algeria and Venezuela. However, the importance of the EU market to Brazil should not be under estimated, as it is the main market for high value product. For example, during January 2008 Brazilian sources suggest that prices for product delivered to the EU during January 2008 were in excess of US$5,000 per tonne while deliveries to Russia and Venezuela average around US$3,000 per tonne.

Consequently Brazil is eager to reach agreement with the EU over re-commencing deliveries which have been prevented since the start of February. In this regard relaxation of restrictions on Brazilian imports to the EU have begun with the EC approving over 100 farms to supply the EU. However, in the short term this is unlikely to have any material effect, as the number of farms is too small to justify a processor committing to the dedicated slaughter process required.

Strong global demand is impacting on prices in both Brazil and Argentina. Quoted in US$, Brazilian prices are currently around 60% higher than a year ago. Despite efforts to control domestic prices, Argentinean producers are receiving 20% more for cattle than last year. Restrictions on beef exports have seen Argentinean beef consumption increase to 67.7 kg per head per year, its highest level for 21 years and more than three times the UK consumption levels.

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