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Brazil sees opportunity to lift beef prices

Beef Central, 30/08/2012

 

South American feedlotRising feedgrain prices due to the drought-driven corn shortage in the US could allow Brazilian processors to raise beef prices, reports out of South America this week suggest.

Brazilian beef prices could trend upwards significantly during the final quarter of 2012, according to Minerva analyst, Fabiano Tito Rosa.

He told trade publication Valor Economico that beef was becoming relatively cheap compared with other proteins like chicken and pork in the Brazilian market, with both competing proteins facing increasing cost pressure due to soaring grain prices.

“Therefore there is room for beef prices to rise, without losing competitiveness,” he said.

“The ratio between beef and other protein prices is the lowest it has been since the end of 2009, which creates a very positive scenario for the longer run, in which there is a seasonal trend for higher prices,” Mr Rosa said.

Elevated beef prices would also impact on Brazil’s competitiveness in international markets, however.

He suggested the relationship between beef prices and livestock prices could expand, which should mean higher operating margins for Brazilian processors in the third and fourth quarters of 2012.

In other South American market developments this week, Brazilian agriculture minister, Mendes Ribeiro, said Brazil might join with Argentina in its challenge through the World Trade Organisation against the US over its fresh beef import restrictions on South American supplier countries.

“We are looking this with much interest,” he said. Brazil’s phyto-sanitary position was described as similar to that of Argentina, with several states recognised by the OIE as free of Foot & Mouth Disease, with vaccination.

Meanwhile, Brazil-based JBS-Swift has closed its Argentinean processing plant in Venado Tuerto after prolonged industrial action by the meat workers union and the impact of earlier Argentine Government policies on export market access. In April, JBS chief executive Wesley Batista, said the Argentine government was destroying business through its policies.

JBS Swift was the largest processor in Argentina with six plants when it arrived in 2005, but now operates at just one Argentine site, in Villa Gobernador Gálvez.

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