South America Beef Exporter Sees Swine-Fever Boost Into 2020

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© Reuters.  South America Beef Exporter Sees Swine-Fever Boost Into 2020© Reuters. Beef Exporter Sees Swine-Fever Boost Into 2020

(Bloomberg) — China probably will keep loading up on Uruguayan beef through the end of 2020 as the Asian nation deals with the fallout of African swine fever, according to Frigorifico Las Piedras SA, Uruguay’s largest independent meat packer.

“It’s had a big impact,” Alberto Gonzalez, a director at the family-owned company, said, referring to the pig disease. “We see China very active,” in the market for meat, he said.

The spread of African swine fever is sparking long-term shifts for the global protein industry, executives from Brazilian meat giants JBS SA and BRF SA said recently. The disease has decimated the hog herd in China, the world’s biggest pork consumer, and the country has been forced to increase meat imports at a time when global protein demand is also climbing. That’s helping boost prices and profits for South American suppliers.

Uruguay’s beef shipments fetched on average $3,717 a metric ton, by carcass weight, during the first eight months of 2019, up from $3,570 in the same period last year, according to national meat agency Inac. China bought almost two-thirds of Uruguay’s beef exports during that period, with government data showing purchases rising 33% from a year earlier to 198,167 tons.

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Argentina is now a major competitor in Europe, and to a lesser degree China, thanks to a major slide in its currency since the start of an economic crisis in 2018. Uruguayan meat packers who pay 77% more for cattle than their Argentine counterparts are sacrificing margins and profitability to compete, Gonzalez said.

“Today, Uruguay is the most-expensive meat-exporting country in the world — we are ahead of the EU, U.S. and Australia,” he said in an interview at the company’s plant near the city of Las Piedras, Canelones Province.

Beef production could drop next year due to a shortage of cows ready for slaughter, said Gonzalez, who is optimistic that herd numbers will rise by as much as 300,000 animals through mid-2020 after bottoming this year.

The shipment of hundreds of thousands of live cows to Middle Eastern markets and rising domestic slaughter cut Uruguay’s herd to 11.3 million animals in 2018 from almost 12 million two years earlier.

Faux Threat

The emergence of lab-grown meat and the new craze surrounding plant proteins means Uruguay has to play to its strengths of producing traceable, hormone-free, grass-fed premium beef for meat lovers, Gonzalez said.

“Uruguay can’t play a volume game,” he said. “It has to play in those types of quality niches.”

Gonzalez is so convinced that beef has a rosy future that Frigorifico Las Piedras is spending $5 million on a new production line that will start producing packaged beef cuts for domestic and international markets next quarter.

(Updates with slaughter, cattle stock outlook from eighth paragraphs)

Source: Investing.com