The South America Cattle Report for February 22, 2017

By Patrick Archer and Ing. Agr. Eduardo Blasina

MONTEVIDEO – In this week’s South America Cattle Report, Argentina sends an important test shipment to China, Brazil beef exports rise 13%, Paraguay bets big on cattle tourism, and Uruguay launches its own cattle futures market.

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Uruguay Cattle Market Prices

Average prices and weekly slaughter numbers in the Uruguay fat cattle market are higher than 2016 levels. With weekly slaughter above 50,000 head for the past two weeks, the market can be described as both firm and fluid. 

The Cattle Brokers Association (ACG) weekly reference price for steers is currently between US$2.95 and US$2.96 per kilo on-the-hook (cuarta balanza), while the heaviest heifers are fetching between US$2.65 and US$2.69 per kilo for animals with carcass weight between 220 and 230 kilos. Supply lines at most plants nationwide are running 7 to 10 days.

In the sheep market, the ACG says “supply lines vary significantly by plant with a preference for adult categories.” There was a sharp drop in weekly slaughter and a modest drop in average prices. The weekly reference price for sheep is US$2.70 per kilo, and the average price for heavy lambs (over 35 kilos) is now US$3.23 per kilo.

Uruguay Weekly Slaughter Activity

Total weekly cattle slaughter for the week ended February 17 was 50,573 head, or 0.2% higher than the week prior and 11% higher than the same week in 2016.

If the current level of slaughter activity holds, February should end with total slaughter above 190,000 head. That would be the highest total for the month of February since 2013 (197,000).

Heifers accounted for 52.6% of the weekly total reaching 26,623 head which was 2% more than the week prior and 12% more than the same week last year. If the current level of activity holds, February will end with 98,000 heifers, the highest level since 2010 (99,000).

Weekly cattle slaughter activity by plant was again led by Frigorifico Las Piedras with 4,110 head followed by Frigorifico Tacuarembó with 3,684 animals and Breeders & Packers Uruguay (BPU) with 3,639 head. Among all plants, Las Piedras processed the most steers (2,409), and BPU handled the most heifers (2,169).

Weekly sheep slaughter fell 44% to 11,917 animals, or 22% below the same week last year. Despite the weekly drop, year-to-date sheep slaughter is still 51% higher than one year ago.

Uruguay Meat Export Prices

For the week ended February 11, the National Meat Institute (INAC) weekly reference price for Uruguay beef exports fell 3.8% to US$3,311 per ton. The four-week moving average price of Uruguay beef exports is now US$3,401 per ton or 5% lower than the same time last year.

For the same week, the National Meat Institute (INAC) weekly reference price for Uruguay sheepmeat exports rose 2.5% to US$3,785 per ton. The four-week moving average price of Uruguay sheepmeat is now US$4,106 per ton or 2.6% below than this time last year. (Blasina & Associates)

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US$1 = 3.0769 BRL

ABIEC: Brazil Beef Exports Rise 13%

Brazil beef exports rose 13% in volume in January compared to the same month in 2016, according to new numbers from the Brazil Association of Meat Exporting Industries (ABIEC). Total revenue from Brazil beef exports also rose 16% to US$436 million.

The #1 and #2 destinations for Brazil beef exports in January were Hong Kong and China. January sales to Hong Kong rose 4% to US$97 million, and sales to China rose 21% to US$75 million.

Egypt is another destination that merits mention, as January beef exports to Egypt rose 55% in volume and 65% in revenue.

Of all categories of Brazil beef exports, fresh beef was the best seller with 87,000 tons shipped valued at US$353 million. (InfoMoney)

 

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US$1 = 15.5650 ARS

Argentina Test Shipment Could Open Doors In China

On Friday a small but very important shipment of Argentine beef left the country bound for Shanghai. The 3.2 ton test shipment could be the first step in opening the gates to much larger quantities of high quality shipments from Argentina to the Chinese market, writes La Nación’s Fernando Bertello.

The buyer, Sydney-based Westwell Australia, is a subsidiary of Chinese food and electronics giant Xiamen Sumpo Group, a company that moves roughly US$5 billion a year in merchandise. The company already sells Australian beef to the Chinese market, and Argentina has been on their radar since last February when Executive Director Michelle Jin came for an inspection trip of farms and frigoríficos.

Westwell’s first Argentina test shipment came from the Frigorífico Rioplantense and was brokered by Parallel S.A. Westwell specializes in selling high quality cuts to Chinese restaurants, hotels and supermarkets. We should know the verdict on the first Argentina shipment within 15 days. If positive, it could open the door to 40 containers or more per year, said Parallel president Facundo Mendizabal.

The Chinese consume 77 million tons of meat per year of which pork represents the vast majority (72%) followed by poultry (18%) and finally beef (10%), so the upside potential for South American beef exporters is very significant. (La Nación)

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US$1 = 5,717.60 PYG

Paraguay Using Cattle Tourism to Lure Importers

Paraguay, the world’s sixth-largest beef producer, is betting on cattle tourism in an attempt to attract more international buyers, according to the president of the Paraguay Meat Chamber (CPC), Korni Pauls.

Pauls says meat importers have been coming from countries like Germany, Italy and Switzerland to learn about Paraguay breeds including Brangus and Bradford, and to see first-hand the quality of production which Paraguay is working hard to cultivate.

“This is an animal that is finished in 20 to 22 months, the meat is tender and it has the specifications that the premium meat markets demand. When the importers come to experience and know the cattle they will be buying, it builds confidence between the local industry and the markets where we want to position our beef,” said Pauls.

Going forward, Pauls says the future of Paraguay beef lies in China, although political hurdles make trade relations difficult. Paraguay’s strategy is to first enter the Hong Kong market, convince local importers of the quality of their beef, and then use that as a trampoline to the mainland. (Radio Ñandutí)

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US$1 = 28.3500 UYU

Uruguay Debuts Cattle Futures Market

Today begins a new chapter in Uruguay which could mark a major transformation for the local cattle industry and the economy in general, writes FarmsUY co-founder Eduardo Blasina.

“The Uruguay Cattle Futures Market (UFEX) goes live this afternoon at 15:00. It will open an online avenue for better managing risk, locking in prices in advance, and serving as a sounding board for the price levels market participants anticipate for the remainder of the year.”

“The contracts will be for 2,500 kilos or basically 10 steer carcasses, and a position will cost less than US$1,000 per contract. The first positions available are for May (harvest) and August (post-harvest). Participation requires the sale or purchase of a minimum of one contract and a security deposit of approximately US$700.” (Blasina & Associates)

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