BRASÍLIA: The steep devaluation of the Brazilian currency because of the country’s economic weakness has boosted exports, particularly beef shipments, but there are signs slower outbound shipment growth is ahead.
Brazilian beef exporters jumped 12 percent year-over-year in the first four months of this year, to 479,000 metric tonnes (528,000 tons), or 43,545 twenty-foot-equivalent units, according to the Brazilian Association of Beef Producers, or ABIEC. But beef exports in April fell to 112,000 metric tonnes, or $434 million, an increase of 2 percent in tonnage terms and decrease of 5 percent by value over the same period of last year. That performance has led ABIEC to now expect that beef exports will grow 15 percent only in the second half of this year, a downgrade of its expectation of 15 percent growth in tonnage for the full year.
The Brazilian Association of Beef Producers, or ABIEC, which represents 28 beef producers and 92 percent of the export market, said its members could be doing even better were it not for stalled negotiations and the economic struggles of some key markets. Sales in the first four months of the year amounted to $1.88 billion, which was virtually equal to the same period of 2015.
ABIEC has been targeting the Middle East and China as potential markets for growing beef exports and both have delivered during the period from January to the end of April of this year, although China could be better. Fernando Sampaio, executive director for ABIEC, told JOC.com he was confident that the weakening real, from almost 1.6 reals to $1 back in 2010 to nearly 4 reals per $1 today, would facilitate growth in beef exports. One reason for lower full-year expectations is that growth in the United States and China has not materialized as it was previously thought it would due to delays in negotiations, Sampaio said.
“On top of this the economies of two of our other key markets — oil and gas producers Venezuela and Russia — have been in freefall recently owing to the dramatic fall in oil and gas prices. We have been having detailed talks with Russian importers, but exports to there are nowhere near where they were a short while ago,” he said.
As recently as 2014 Russia was the top global destination for Brazilian beef exports — with 310,058 metric tonnes worth $1.3 billion — but now it has fallen to eighth place with just 7,298 metric tonnes and $19.7 million of sales in April, according to ABIEC’s figures. At the end of 2015 Russia imported 169,457 metric tonnes of beef, which is down 45 percent from the 2014 figure, and the value of those imports collapsed by 57 percent, down to $551,872. Another trend is that Russia is now importing the cheapest cuts of beef, worth just $3,257 per tonne, compared with $4,180 per tonne just over a year ago. That is the second-lowest per tonne rate out of all the 46 countries that ABIEC’s members export to.
Venezuela has fallen from third at end of 2014 with 169,545 metric tonnes to fourth at the end of 2015, and ninth through the first four months of this year as imports of Brazilian beef into the sickly Caribbean-facing country are falling monthly, according to ABIEC. ABIEC President Antonio Jorge Camardelli said that he believed Saudi Arabian imports of Brazilian beef would also grow this year now that they have removed some restrictions. The country in April imported 3,915 metric tonnes of Brazilian beef worth $15 million.
“I think by the end of this year Saudi Arabia will cement for itself a place in our top 10 destinations for beef exports,” said Camardelli. Although exporters have benefited from the depreciation of the real, they must still contend with “inadequate transport infrastructure” and “unnecessary government red tape,” according to Sampaio, who expects that the newly installed government of Michel Temer will improve matters.
The leading Brazilian beef exporters so far this year are JBS Foods, Marfrig, Masterboi and Frigosul, and top export gateways so far have been Santos and Paranagua, with nearly 70 percent of all beef exports passing through Santos, the country’s biggest port.
