Brazil's 2006 meat export performance remains to be seen

BRAZIL - According to Credit Suisse bank, the near term outlook for Brazilian poultry, pork and beef is bullish due to strong export demand. The forecast growth in exports is partly due to more value-added products and specialty meats, as well as various beef and pork export markets available, Credit Suisse analysts said.
calendar icon 3 February 2006
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Brazil's commerce ministry Wednesday reported that 34,100 tonnes of pork were exported in January, compared with 39,400 tonnes and 34,600 tonnes in December and January 2005 respectively.

Poultry exports in January totalled 206,600 tonnes, down from 237,000 tonnes in December 2005 but up from 187,400 tonnes during the same period last year.

Beef exports hit 80,900 tonnes in January, up from 66,000 tonnes and 65,600 tonnes in December and January 2005 respectively, according to Dow Jones Newswires.

Brazil's meat industry is optimistic that gains will continue provided animal diseases such as foot-and-mouth disease and bird flu do not affect current export profits.

The highly pathogenic H5N1 strain of bird flu has also not been reported in Brazil so far. However, a USDA report said that Brazil's beef and pork outlook for 2006 remains gloomy due to export restrictions by countries mainly from the EU and Russia.

The report forecasts an increase in beef production due to strong domestic demand and improvements in genetics and pasture conditions, but a drop in beef exports due to trade restrictions. The outlook for pork is less positive with both production and exports expected to fall.

Continued expansion is expected in Brazilian beef production despite cases of foot-and-mouth disease in October last year. Analysts expect higher purchasing power enabled by a rising economy to increase domestic demand for beef. Lower prices from beef originally meant for the export market have also encouraged beef consumption.

However, exports are projected to fall 10 percent from last year due to partial bans from EU countries and Russia. Huge drops are not expected even though these countries consume half of Brazil's beef exports as restrictions have been reduced and bans are only confined to two Brazilian states. Furthermore, Brazil's diversified export market to 150 countries is expected to cushion the fall in sales from the EU and Russia.

Meanwhile, increased partnership between packers and cattle producers to supply beef cuts to restaurants and the export market is likely to boost demand.

Beef production in 2006 is estimated at 8.8 million tonnes, up 2.5 percent from last year compared with the 8 percent increase in 2005. Production costs are said to have increased 10 percent in 2005, while cattle prices remained unchanged.

Pork exports on the other hand, may fall as much as 20 percent in 2006 due to lower exports to Russia. Russia is a major market for Brazilian pork, accounting for 67 percent of total pork exports in Brazil.

Source: eFeedLink - 2nd January 2006

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