Argentina continues to stall the approval of beef export permits due to a holiday spike in local prices, with January shipments expected to be down sharply.
"Exports were down about 25% on the month in December and will fall even further in January," an executive at one of the leading beef exporters told Dow Jones Newswires.
A spokesman for the agricultural trade office, known as Oncca, said that the government was issuing export permits at a normal pace. However, exports of innards, fresh, frozen and processed beef totaled just 39,751 metric tons in December, down from 54,143 tons a month earlier.
On Dec. 14, Oncca stopped approving beef exports as prices jumped in the face of strong seasonal demand. For two days, all export permits were stalled, but then Oncca loosened controls on chilled beef and offal shipments.
The export of pricey cuts, including the Hilton Quota of low duty shipments to the European Union, aren't being blocked.
However, more domestic supply problems and export disruptions are likely this year.
A worse crunch and increased export restrictions are expected in April and May, Miguel Schiaritti, the president of the Argentine beef chamber, Ciccra, said recently.
The expected shortages follows severe drought over the past two years that saw ranchers sell herds from parched pastures, in addition to government price caps that spurred herd culling. Last year, the country matched the 1978 record of 16 million cattle slaughtered.
Argentines are among the world's top beef eaters, with per-capita consumption of more than 73 kilograms a year.
Because of that high consumption, the price of beef is a sensitive political issue in Argentina, with the government making ample supplies of cheap beef a key focus of farm policy. Subsidies for feedlots and periodic export limits are the main tools used by the government.
Prices have surged since November on worries over supply and the traditional increase in demand for holiday barbecues. The average price for a live steer at the benchmark Liniers cattle market has risen almost 25% since November, trading at 4.73 pesos ($1.24) a kilo Wednesday.
In 2008, Argentina repeatedly blocked beef exports to shield domestic consumers from soaring international beef prices, but encouraged shipments through most of last year. Prices fell due to the international financial crisis and the higher production ensured cheap beef for local consumers.
Exports of fresh and frozen beef totaled 419,335 metric tons last year, a 57% increase from 2008, according to the agricultural health and sanitation service Senasa.
Those exports were valued at $1.65 billion, up 11% on the year.
According to the U.S. Department of Agriculture, Argentina's beef production is expected to fall 13%, to 2.8 million tons in 2010. The country is expected to begin the year with a herd of 50.2 million, down 10% from just two years ago.
Argentina is forecast to slip from being the world's third-largest exporter in 2005 to sixth place in 2010, according to the USDA.
agriculture.com
Source: newsroom - meattradenewsdaily.co.uk
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