USDA GAIN: Argentina Livestock & Products Semi-annual

USDA GAIN: Livestock and Products

Reports » USDA GAIN: Livestock and Products » USDA GAIN: Argentina Livestock & Products Semi-annual

08 March 2012

Argentine beef exports for 2012 are expected to decline to 280,000 metric tons, 20,000 tons lower than USDA’s current volume. However, the final volume will be decided by the Argentine government which authorizes export licenses. A severe drought during the service period is expected to somewhat reduce the calf crop. The recovery of the cattle herd continues but at a slow pace.

Production:

Argentine beef production for 2012 is forecast to remain unchanged at 2.6 million metric tons (MMT), despite an expected larger slaughter than USDA’s current level. The slaughter is expected to increase as result of a severe drought and very high temperatures suffered during December 2011 and January 2012. Larger than expected number of cows and calves will be slaughtered, being lighter animals they will bring down the average carcass weight. In late January and February the rains returned with a vengeance but many pastures were already damaged. The level of reserves for next winter will be significantly lower and of poorer quality than normal.

The cattle ending stock for 2012 is now projected at 49.6 million head, a drop of 400,000 head from USDA’s official number. This is a result of the negative effects of the drought and high temperatures during the key period of service which is expected to produce a smaller than expected calf crop and to a slightly higher slaughter than previously projected.

Based on recently released preliminary data, the calf crop for 2011 was higher than USDA’s number. This increase is the result of better weaning ratios because of very good weather conditions in 2010-11 and high cattle prices which encouraged producers to invest more in obtaining the largest number of calves possible.

Trade:

Argentine beef exports for 2012 are now forecast at 280,000 metric tons, 20,000 tons lower than USDA’s current volume. Again this year the industry expects the government to determine the level of shipments through the administration of export licenses. As soon as cattle or beef prices begin to increase, the government would be expected to restrict export authorizations to ensure stable domestic supplies. Another factor which will negatively affect local exports is the devaluation of the peso which is projected to run at a slower pace than inflation, making Argentine beef exports less competitive in the world market. The main local exporting plant of thermoprocessed beef is currently not shipping product to the U.S. since last year as FSIS found ivermectine residues in some products. The sanitary services of both countries and the company are working to overcome this situation. Exports of thermoprocessed beef to the US in late 2011 were very small and they are expected to continue that way until the problem is resolved.

There are currently 120-150 meat packing plants closed, of which 30-40 have federal transit authorization. Most large beef export companies are in a difficult situation due to the small volume they are able to process and sell. A good number of export companies have reconverted their business from exporting to selling into the domestic market. However, if policies and market conditions encourage larger exports, most plants could begin operation quite fast.

USDA GAIN: Livestock and Products