Another setback for Brazilian beef

The Brazilian beef industry faced yet another setback at the end of last week, as the US announced the suspension on all fresh and frozen beef imports from Brazil – in what has already been a turbulent year, following a widely publicised meat scandal.

The blanket ban came swiftly after the Brazilian government had self-imposed the suspension of five processing facilities that were exporting to the US. Unsatisfied this would address ongoing food safety and quality concerns, the USDA subsequently halted all imports of Brazilian beef.

Export volatility

Brazilian beef exports had somewhat re-established themselves through May after trade disruptions in April. 

Beef exports were just over 90,000 tonnes swt in May – a 29% increase month-on-month. However, exports in April were the lowest monthly volume since 2012, a direct result of numerous trading partners issuing temporary import restrictions.

Shipments to the US had edged higher throughout the year, peaking at just below 4,500 tonnes swt in May – making it Brazil’s eighth largest beef export destination for the month. Until corrective measures are taken to address safety concerns, access to the US market will once again be restricted.

While removal of the US market reflects lost opportunity, it still only accounted for 5% of Brazilian exports in May. Furthermore, Brazil continues to expand into China, where it remains the market leader.

Cattle prices impacted

Brazilian cattle prices have moved lower through the first half of 2017, with prices in Brazilian Real terms back 15% since January, underpinned by economic instability and the aforementioned industry setbacks.

In US dollar terms, however, Brazilian cattle prices have been further compounded as a result of a weaker currency – trading close to the historical lows.

Sao Paulo state steer prices averaged 130US¢/kg live weight for the month of June, 15% lower-year-on-year.