Livestock and Products Annual Report - Brazil 2009

The beef sector is currently facing challenges due to a restructuring of Brazil's cattle sector and lower export volume, according to Joao F. Silva in the latest GAIN report from USDA Foreign Agricultural Service.
calendar icon 23 January 2010
clock icon 5 minute read

Report Highlights

Post forecasts beef production and exports to rebound in 2010 at an average rate of four and 10 per cent, respectively. The beef sector is currently facing challenges due to a restructuring of Brazil's cattle sector and lower export volume.

Executive Summary

The outlook for the Brazilian economy in 2010 calls for a rebound in economic growth to about four per cent, with lower inflation and a continued increase in consumer purchasing power. Brazilian meat exporters are also optimistic about growth of the world economy in 2010 and expect Brazilian exports of beef and pork to increase in their major markets.

Post forecasts beef and pork production to increase at an average of four per cent in 2010, supported by strong export growth and firm domestic demand for animal proteins. Post revised production and export estimates for Brazilian beef and pork for 2009 to reflect new estimates made by trade sources. These estimates reflect the current mood among Brazilian exporters as they continue to face uncertainty in the world market due to the credit crunch.

Beef production will likely drop for the second consecutive year due to a continued shortage of cattle and reduced exports, although domestic demand is supporting any further drop in production. The financial constraints faced by several beef packers in Brazil remain critical, although most analysts indicate some improvement after the bailout of the sector by the National Bank of Economic and Social Development (BNDES).

Review of the pork outlook for 2009 reflects new data obtained from trade sources and reveals higher pork exports and domestic demand as pork prices are competitive with beef prices.



After several years of intense cow slaughter, which prompted an increase of over 35 per cent in cattle prices during 2008, as compared to 2007, the Brazilian beef industry is still facing lower availability of finished cattle for slaughter. And, the situation was aggravated by the lack of payment by some packers which filed a bankruptcy procedure to stall payment to producers. However, this situation is beginning to change and Post expects an increase of nearly three per cent in the cattle slaughter in 2010 and cattle inventories are expected to reach nearly 191 million by the end of 2010.


The outlook for cattle exports remains strong and post forecasts that exports will likely increase by 20 per cent in 2010. Venezuela remains the main destination for Brazilian cattle, followed by Lebanon. The state of Para in the Amazon region is the main source of live cattle for exports.

Brazilian beef packers and exporters continue to criticize exports of live cattle principally during the current period of lower availability of cattle for slaughter. The hides and skins industry also supports beef exporters' complaints about live cattle exports.



Post forecasts beef production to increase by four per cent in 2010 due to the following factors: a) increased exports; b) higher availability of cattle for slaughter; and c) continued domestic demand for beef as the Brazilian economy is expected to rebound in 2010 with an estimated economic growth of four per cent.

Post revised downward its 2009 beef production estimate by one per cent over last year. A big factor in the drop is the significant reduction of beef exports estimated for this year, combined with the shortage of finished cattle for slaughter. However, increased domestic consumption helped the sector from a further decline in production, as consumer purchasing power remained constant. The Brazilian economy is recovering faster from the impact of the financial crisis and some analysts have revised their estimate that the economy will actually grow by one per cent this year.


Post forecasts beef exports to increase by 10 per cent in 2010 as Brazilian beef exporters are optimistic about the economic recovery in their major markets, and new exports to markets recently opened such as Indonesia and Chile. They also expect a continued recovery of the European beef market as more Brazilian cattle farms are enrolled in its traceability programme.

Post revised beef exports downward by nearly 15 per cent in 2009 due to the impact of the current world credit crunch affecting the most traditional importers of Brazilian beef, such as Russia, Saudi Arabia, the United States and Venezuela. Beef exports to the European Union declined by 25 per cent reflecting the difficulties of Brazilian packers in purchasing animals from eligible cattle farms. In addition, beef exporters complain that the valuation of the Brazilian currency affected their export profitability.


The controversial report (because of the concept of the legal Amazon) released by Greenpeace regarding deforestation of the Amazon linked to the cattle industry had the benefit of increasing environmental awareness of the beef industry and speeding traceability of cattle from the area. Brazilian beef packers started to request assurances from livestock producers in the area that animals do not come from farms that illegally deforest the rainforest. An agreement between Brazilian beef packers and the Brazilian Supermarket Association will suspend contracts with beef suppliers found to be involved in deforestation.

The National Bank for Economic and Social Development (BNDES), the largest subsidized financing source of credit to Brazilian meat packers (beef, pork and poultry) also released new rules to provide loans to these companies. Packers that borrow funds from BNDES will be required to present an environment sustainable project for their operations in the area.



Post forecasts pork production to continue to increase in 2010 at an average rate of four per cent, slightly above the 2009 level. Our projections reflect current optimism of pork exporters for increasing exports during next year and assume that the worst of the global financial turmoil is over. However, traders remain cautious about the impact of the valuation of the Brazilian currency and access to credit for main importers, such as Russia.

On the other hand, hog producers currently enjoy stability in feed prices, mostly corn. Post also forecasts an increase in domestic pork demand because pork prices are currently competitive with beef prices.


Post forecasts pork exports to increase by 8 per cent in 2010 as demand from major Brazilian clients remain firm. Brazilian pork exporters are also focusing their strategies in new markets in Asia, such as China, and have begun to advocate for access to the US and Mexican markets.

Brazilian pork exports in 2009 are expected to increase by five per cent reflecting higher shipments to Russia, Singapore, Angola and other Eastern European countries.

Further Reading

- You can view the full report by clicking here.

January 2010

© 2000 - 2023 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.