ARGENTINA.
BEEF EXPORTS TO INCREASE 2009.
Beef exports from Argentina should be in the region of 500,000 tons for 2009, the volume however will depend, on the government policies in regard to exports.
The government has prepared a draft quota for the year 2009 and much depends on inflation and government restraints for the year.
The government increased controls of beef exports in the first half of 2008, in order to guarantee domestic supplies, during the four month farmers strike.
While in 2008 the government did increase the beef export quota to 500,000 tons, it was followed by restrictions on the beef plants, that had to guarantee 75% of production in the plant for the domestic market.
The National Organization of Control of Agriculture Commercialization(ONCCA), administer a control of exports system known as the ROE, this is a system where the export plants have to register their proposed meat for export, with the destination, name of client, type of cut and agreed prices.
This is then considered by ONCCA, and the answer is given yes or no if the meat can be exported. As ONCCA have the daily purchases and values of all livestock purchased and the amount of meat and name of client on domestic market, the system cannot be circumnavigated or foiled in any way.
For the new year of 2009, frozen beef is expected to lead the beef exports and the Russian Federation is the main market.
This consists of block packed forequarters and hindquarters of manufacturing cows, round cuts and chuck and blade from better quality cows, not butchers quality a medium type cow with reasonable flesh covering.
Israel and Venezuela are the second largest buyers of frozen beef, forequarters for Israel and compensated sides cut to retail specification for Venezuela. The beef to Venezuela is a government oil for beef barter system of payment, the plants are then paid by the government of Argentina.
Germany remains the leading buyer of chilled Hilton quota beef, in the European Union, followed by Italy, the Netherlands and the United Kingdom.
Chile is also a very important market for fresh beef, albeit a seasonal trade from the month of September to March of each year.
Processed beef corned beef and cooked meats, are still mainly exported to the United Kingdom and the United States.
The Hilton price for the prime cuts in the first half of 2008 was, topside, silverside, round, rump and loin US$5,500 FOB, the port of Buenos Aires. Whilst this is a good price in Argentina, it’s a pittance in real terms on the world stage, however a 40% increase of 2007.
In Chile strip loins are worth US$17,500 per ton, while the remaining Hilton cuts are only US$5,100, however Chile compares well with the EU, as the type of cattle are inferior.
The Russian prices were increased by 50% this year, compared with 2007.
The average for the first six months of 2008 was, Chuck and blade US$3,500, round cuts 3,750 and trimmings U$2750, block packed cow U$2850. all prices FOB Buenos Aires.
The cooked meat sector, with meat taken from the worse of the manufacturing cows, was excellent with corned beef US$3,300 per ton and cooked meat US$5,800. after loss 40% in cooking and drying on the latter.
There have been a large slaughtering of cows, both from the beef and the dairy sectors in the last year. The drop in commodity prices since the economic slowdown, today makes beef farming look attractive again.
The government has introduced a scheme for feed-lots, to encourage the fattening of dairy steers in particular for the domestic market, this works out at US$41 per year.
Under normal condition Argentina consume 80% of beef produced, on the domestic market, however in 2008 it was in fact 87.5%.
This is maintained because of government policy, in keeping beef prices artificially low for Argentine consumers, were this not the case then exports could quite easily exceed 900,000 tons a year.
Every year since 2005 has seen an increase in the number of cattle finished in feed-lots, this is in no small part is due to the fact, that Brazilian beef companies own most of the beef plants today. The Russians and Americans own the rest of the export beef plants.
Live steer prices for November, averaged US$ 82 cents per kilo, which is significantly lower than neighboring countries.
Prices in Brazil for August were US$1.85 cents per kilo, Uruguay US$1.72 cent per kilo and Paraguay US$1.55 cents a kilo. In August Argentina had cattle at US$1.05 cents per kilo.
This gives an indication to the extent the government of Argentina, keep the cattle prices artificially low for good sound political reasons, 40 million voters.
