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Thanks to a 50% Hike in Beef Prices Brazil Exports 22% Less and Earns 18% More

Brazilian slaughterhouse From January to August, Brazil's beef exports fell 22% year-on-year to 711,716 tons swt (scale weight tons), while revenue was up 18% as average export prices increased 50% to US$ 3,818 ton swt.

Exports have been affected by an appreciating local currency, the Brazilian real, which has increased 22% against the US dollar year-on-year, low supplies (cattle prices have increased 70% to US 362¢/kg cwt last week in São Paulo) and higher prices in the domestic market.

In August, beef exports totaled 96,079 tons swt, down 13% year-on-year, while average prices reached a record US$ 4,341 ton swt, up 57% on August 2007.

It is expected that exports will remain low during 2008, as cattle prices are not forecast to decrease until 2010, beef production is expected to fall 5% this year, and the Brazilian Central Bank has raised the basic interest cash rate to 13% p.a. with further increases expected until 2009, adding pressure to the appreciation of the local currency.

Fray Bentos

The Brazilian group Mafrig has announced that it will begin production of cooked beef for the British market at the old Anglo abattoir in Uruguay, which for decades was the leading beef exporter to the United Kingdom.

The Fray Bentos plant, where the brand name Fray Bentos corned beef was born and was staple food for British homes during most of the twentieth century, has been refurbished and is expected to begin full production in the coming weeks.

Actually the city of Fray Bentos with excellent port facilities and next to some of the best Uruguayan cattle grazing land developed and expanded on the back of the beef industry until the seventies when the British sold the Anglo plant to the Uruguayan government meat board.

"We've already begun contracting personnel and cattle should begin arriving in the next few weeks," said Julio Bonizzi, manager of the Anglo plant. He added that the first shipments of cooked beef are destined to the UK in ten pound packs.

"Later we will target the US market. With so many problems and issues to solve, the re-opening of the corned beef plant is great news for Fray Bentos, a global brand which again will be in the market," said the mayor of Fray Bentos, Omar Lafluf.

The Mafrig group has become the fourth largest producer of beef and beef products of the world with 19 modern abattoirs in Mercosur member countries: nine in six Brazilian states; four in Uruguay; five in Argentina and one in Chile.

Marfrig earlier this year announced it would buy assets in Brazil and Europe from US group OSI for an initial US$ 680 million plus a possible further US$ 220 million depending on future performance of the European operations.

Mercopress

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