A controversial proposal to allow Brazilian beef into the US
would have limited impact on world market dynamics – but that would not be the
case if China and Saudi Arabia followed suit.
A plan by the US, unveiled last week, to allow Brazilian
beef exports into the US appears unlikely to spur huge volumes given that they
will still be subject to quota limits.
Indeed, Brazil will have to compete for part of the 64,805-tonne
quota allocated to "other countries", compared with the 213,000 tonnes allowed
to New Zealand exports and 408,000 tonnes for Australian supplies.
"Outside of the in-quota rate, Brazil won't be competitive on
price in the US, leaving limited scope for Brazil to place significant volumes
into the US in 2014 even if imports are permitted," said Paul Deane, senior ag economist
at Australia & New Zealand Bank.
Paragon Economics and Steiner Consulting said in a report: "The
immediate impact of Brazilian beef in the US beef supply picture could be very
The impact on world beef trade dynamics, in particular for
Australia, would be far greater if China and Saudi Arabia reopened to Brazilian
beef, having introduced bans in 2012 following a reported case of mad cow
disease, or BSE, in the state of Parana.
The curbs spurred a surge of more than four-times, to
155,000 tonnes, in Australian beef exports to China in 2013, with shipments to
Saudi Arabia jumping above 30,000 tonnes for the first time.
Brazil has a "strong ability" to supply these markets, given
that its output is expected to hit a record 10m tonnes this year, against a difficult
background for domestic consumption, softened by weak economic growth and
Overall, "Brazil's beef market access is critical in 2014,"
Mr Deane said, forecasting a rise of 400,000 tonnes, or 17%, in total beef
exports from Argentina, Brazil and Uruguay this year.
While Brazilian cattle prices, in local terms, averaged R$108
per head in the last three months of 2013 according to Rabobank, up 13% year on
year and up 5% quarter on quarter, the impact on exports has been reduced by a
"Fresh beef export prices in November averaged $4,656, the
highest level of 2013 but still below 2012 levels," Rabobank said.
US farmers have cited fears of importing foot-and-mouth disease
as a core concern over the potential opening up to Brazilian imports, a
proposal which Beef Magazine termed "very scary".
Paragon Economics and Steiner Consulting said: "Foot-and-mouth
disease has no impact on human health but it is a scourge for the cattle industry,"
in prompting herd losses and trade bans.
US officials say that "fresh beef can be safely imported"
from approved Brazilian states "provided certain conditions are met".