Argentine restrictions have affected the global beef market

Amid global price pressure and rising livestock prices, the Argentine government has suspended beef exports for 30 days. After this period, new restrictions were placed on the amount and type of beef that could be exported, affecting the local industry and the global market.

In its latest Beef Market Review, Rabobank forecasts feed prices to rise as weather conditions and supply constraints keep feed grain prices high. Cattle prices in the top beef exporting countries continued to rise or remain stable during the second quarter of 2021. Notable exceptions were Argentina and CANADA, where there was a rather sharp decline in cattle prices.

Argentina's restrictions are having a global impact on the beef trade

In June, the Argentine government introduced a beef EXPORT restriction system to increase domestic supply. The measure comes after a 30-day suspension of beef supplies in May. The new quotas now limit Argentine beef exports to 50% of the average monthly volume exported from July to December 2020. “With Argentina being the fifth-largest exporter of beef in 2020 and the second-largest supplier to CHINA , this reduction in export volumes is significant and could significantly affect global beef trade,” explains Angus Gidley-Baird, Senior Analyst, Livestock Division at Rabobank.

At the end of August, Argentina plans to review the imposed restrictions, but the possibility of extending them until December is not ruled out. Rabobank suggests that the new export system is unlikely to be lifted in August, although it is possible that some aspects of the restrictions could be eased, especially exports to China and Israel, the country's largest export markets.

Following talks between the manufacturing sector and the government, where producers demanded permission to export kosher MEAT to Israel and resume supplies to China from September, a new announcement has been made. On August 16, the Argentine government announced that it would give Israel an additional 3,500 metric tons per month beef import quota.

“There are several possible scenarios when forecasting Argentine beef exports. But we think it is most likely that export volumes will fall by 50% compared to the corresponding month of the previous year for all export destinations, with the exception of sales to China, which resumed in September, and quotas for certain countries issued until December 2021. In this way, the authorities will be able to meet the basic needs of the manufacturing sector and increase the availability of beef in the domestic market, reducing exports by only 9.5% compared to 2020,” says Gidley-Bird.

Brazil and Uruguay will win, production in Argentina will suffer

Limited exports from Argentina - mainly to China - are expected to favor neighboring markets such as Brazil and Uruguay. Brazilian beef exports to China increased significantly in June and July. Brazil's exports in June (82,000 metric tons) were up 22% from May, and in July they rose another 11% to reach 91,000 metric tons, the highest shipment this year.

In the first half of 2021, beef exports from Uruguay to Argentina reached around 1,400 metric tons, the highest level in ten years. Shipments from Uruguay to China also increased by 45% to around 146,000 metric tons, while shipments to Israel increased by 83.6% to 8,200 metric tons.

Although the Argentine government was expected to release a manufacturing stimulus plan - to prevent short-to-medium-term declines in livestock and production - Rabobank believes, based on an analysis of previous situations, that production could fall by 4% to 5%. % this year.

And this fact will be taken into account when preparing the monthly analytical report Meatinfo.ru