The markets Australia needs to watch as Brazil beef exports grow

INCREASED volumes of Brazilian beef will quickly hit the worldwide export market, the results of three years of herd rebuilding within the South American cattle nation, however the penalties for Australia will not essentially be destructive.

More beef obtainable at a aggressive value may nicely enhance consumption, and grow total demand for beef, in key importing nations like China, benefitting Australia which is focusing on the upper finish of the market.

However, there can be some markets, such as the United States, the place Brazilian exports may create issues for Australian product, analysts say.

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Rabobank’s animal protein analyst based mostly in Sao Paulo, Wagner Yanaguizawa, says the elevated provide, mixed with comparatively low costs due to a depreciated actual and constrained provide in different exporting international locations is predicted to enhance the competitiveness of Brazilian beef within the worldwide market.

In his newest report on the inversion of the cattle cycle in Brazil, Mr Yanaguizawa mentioned China was anticipated to stay Brazil’s largest export vacation spot till a minimum of 2025.

Due to the retention that began in 2019, a considerably elevated variety of Brazilian calves and steers prepared to enter intensive manufacturing programs ought to attain the market within the second half of 2022, the report mentioned.

But consumption in Brazil, one of many world’s strongest beef-eating nations, is waning.

Higher costs coincided with decrease buying energy through the pandemic outbreak.

Mr Yanaguizawa mentioned beef was now much less inexpensive to a phase of Brazilian customers and final yr per capita beef consumption reached one of many lowest ranges within the final 16 years at 26.2kg.

At the identical time export demand is powering, notably from China because it opened its door to Brazilian beef once more in December, having suspended exports for 3 months due to circumstances of bovine spongiform encephalopathy,

Demand from different locations such as the US, Egypt, the United Arab Emirates and Chile has additionally been pink sizzling. Brazilian shipments in February have been up 34 per cent year-to-date in quantity and 61pc in worth – their greatest February in historical past for worldwide gross sales, Mr Yanaguizawa’s report mentioned.

Australian-based animal protein analyst with Rabobank Angus Gidley-Baird mentioned the extra enticing pricing on supply within the export market would probably see Brazilian manufacturing shift to goal exports.

More Brazilian beef in China could possibly be a constructive for Australia, driving total consumption and demand for beef, he mentioned.

“Australia is not directly competing with Brazilian beef in China. We are very different in terms of our positioning,” he mentioned.

The US, nonetheless, could be a market Australian beef exporters could be watching intently, he mentioned.

Brazil can be competing within the lean trimmings house instantly with Australia.

“We have a country-specific quota with the US, where as Brazil falls into the ‘other’ category – which is a lower quota and is also shared with other suppliers,” he mentioned.

Even with tariffs utilized, Brazil could give you the option to provide US importers with product that isn’t prohibitively costly, relying on alternate charges and their value.

“Even by late next year, Australia still won’t have a lot of surplus cattle, and with processing limitations here as well, our beef supply for export will still be constrained,” Mr Gidley-Baird mentioned.

“Combined with the US contraction in their own domestic supply, the pressure might be on for them to open up more access to Brazil which will mean a longer-term bigger competitor for Australia in that market.

“US importers will definitely be wanting arduous for lean trimmings.

“If Brazil negotiates a country-specific quota, they would have a far more definitive access.”

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