Brazilian beef exports increased 30 per cent year-on-year in May, to 83,000 tonnes swt.
After a sluggish start to the year, beef exports for the first five months of 2012 are now 3.1 per cent above year ago levels, at 339,000 tonnes swt.
Contributing to the price competitiveness of Brazilian beef has been a significant decline in the strength of the Brazilian currency, the real, along with an increase in cattle throughput.
The real decreased 18.4 per cent year-on-year to the end of May, falling from a high of 62US¢ in May 2011, to average 49US¢ in recent weeks.
The depreciation has been influenced by a significant tightening of monetary policy within Brazil, with the Brazilian Central Bank cutting interest rates by 400 basis points since August 2011.
The latest interest rate cut (30 May) of 50 basis points took the official cash rate to 8.5 per cent.
These interest rate cuts come as Brazilian policy makers look to shore up an increasingly sluggish economy. The World Bank revised down its 2012 growth forecast for Brazil from 3.4 per cent to 2.9 per cent in its latest global outlook released in June.
The decrease in the real has come at an opportune time for Brazilian beef exporters, as supplies have increased with the onset of the dry season.
The increased supplies have also been reflected in the physical market, with the Sao Paulo cattle market index decreasing from $US3.25/kg in January, to $US3.04/kg as of 13 June (FNP).
Although Brazilian beef exports have increased in the five months to the end of May, exports to Russia, historically Brazil’s largest beef export market, have started 2012 slowly.
The ban put in place by Russia on a number of Brazilian beef processing plants in June 2011 has limited the amount of Brazilian beef able to access the Russian market, constraining export growth.
An increase in exports to other market has helped to compensate for the reduced market access into Russia, including to Chile, Hong Kong and Egypt.
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