São Paulo – Beef exports from Brazil grossed just over USD 5 billion from January to November, a 6% drop over the comparable year-ago period. Sales amounted to 1.3 million tons, a 1.7% increase. The numbers were released this Monday (12) by the Association of Brazilian Beef Exporters (Abiec) in São Paulo.
Abiec chairman Antonio Jorge Camardelli said export revenues should reach USD 5.5 billion by year’s end, which would be a 7% drop from 2015 numbers. Abiec was expecting USD 6 billion in 2016. Shipped amount should match 2015 levels at 1.4 million tons.
“Foreign exchange deviations in some of the leading buyers had a major impact [on Brazilian exports],” said Camardelli at a press conference. “The price of the US dollar [in Brazil] also [had an impact],” he added.
According to Abiec, that impact was felt mostly in markets such as Russia, Venezuela, Iran and Egypt. The industry saw its revenues in those markets shrink by USD 670 million this year.
Sales to Egypt – which will often exceed 20,000 tons a month – plummeted in October (6,500 tons) and in November (3,400 tons), during which time the Egyptian pound took a dive, after the local central bank unpegged its currency. The country struggles with a shortage of dollars, and the move was designed to increase inflows.
How exports behave will hinge on how Egypt’s economy eacts. “In case they sort out the currency issue, we will need an [export] program for Ramadan,” said Camardelli, referring to the Muslim calendar month during which believers fast from sunup to sundown, but get together for collective meals in the evening. In 2017, Ramadan will begin in late May. This is usually a stockpiling period in Arab countries. “One cannot rule out the specificities of each country,” the executive remarked.
Another reason for the lackluster sales was exports to Saudi Arabia. After a three-year long ban, the country went back to buying Brazilian beef in 2016. In May, sales from Brazil to Saudi Arabia surpassed 4,000 tons, in line with the usual amount shipped to that country, but sales began to drop as of June, and eventually reached 1,880 tons in November.
For Camardelli, this was a reflection of the long spell during which the Brazilian product was prohibited in the Saudi market. “That’s the price you pay for being left out. It’s better to sell a different product than to be left out altogether,” he said. Brazilian beef was predominantly replaced by product from India while the embargo lasted. “Consumers get used to a different product,” the Abiec chairman said. He stressed that in 2017, exporters will need to work in order to regain their foothold in Saudi Arabia.
Projections
The recent oil price hike – which could well continue for some time – is a factor in Abiec’s having “great expectations” for sales in Arab countries next year. The commodity gained strongly on the international market since the Organization of Exporting Countries (Opec) decided, on October 30, to slash production by 1.2 million barrels per day starting in January.
Another potential driver of Brazilian foreign sales as a whole is the entry into the United States’ raw beef market in 2016. “The USA is a major facilitator when it comes to entering other markets,” said Camardelli.
He mentioned that countries Brazil does not sell to, such as Japan, South Korea, Taiwan, Mexico and Canada could mean an additional USD 1 billion per year, or 180,000 tons.
Abiec is also expecting an increase in domestic livestock supply in 2017, which would make more beef available to export. The reason is that the high price of corn in 2016 led many farmers to postpone the fattening of livestock, which could happen now.
In 2017, Abiec estimates 1.5 million tons and USD 6 billion in exports, which would mean an 11% increase in volume and a 9% increase in revenue compared with 2016.
*Translated by Gabriel Pomerancblum