Meat + Poultry - September 2004 - 14

Outback outlook: Beef and pork get weather reprieve
A return to more normal weather conditions following one of the
worst droughts in a century has improved the outlook for Australia's
livestock industry. Pasture conditions have improved markedly and,
with a continuation of more normal weather conditions, should lead
to significantly improved fodder reserves in 2005. The Foreign Agricultural Service's post in the country anticipates that female slaughter rates will continue falling leading into 2005, as producers rebuild
herds following the prolonged drought conditions.

The detection of bovine spongiform encephalopathy in the U.S.
and the subsequent closure of the Japanese and other markets to
U.S. beef exports is mostly responsible for the changes in Australia's beef trade flows. Australia is expected to continue to ship record
quantities of beef to Japan in the absence of U.S. competition.
The Australian pork industry is in the process of recovering from
the disastrous conditions that beset the industry in 2003. Severe
drought greatly restricted feed grain production and forced grain pric-

Assuming more normal weather conditions continue, slaughter
levels are expected to fall, which would lead to a corresponding
decline in production and exports.
Foreign Agriculture Service officials forecast a slight rise in the cattle
inventory in 2005, bringing ending-year numbers to just below the level
reached prior to the drought. Producers are withholding female cattle
from slaughter in order to rebuild herds. Assuming more normal weather conditions continue, slaughter levels are expected to fall, which
would lead to a corresponding decline in production and exports.
Japan is overtaking the U.S. as the largest destination for beef exports, on a volume basis. Preliminary year-to-date figures have exports to Japan up sharply, with record export figures recorded for the
more recent months. Beef shipments to the U.S. are down, although
not nearly as much as previously expected, while prices for U.S.-destined products have remained relatively firm.

es to record levels, decreasing producer returns. A stronger Australian dollar reduced export returns and boosted the competitiveness
of imports in the domestic market.
Pig inventories are forecast to rise 11.5 percent in 2005. Slaughter, however, is expected to fall, along with pork production. Pork exports are forecast unchanged in 2005, while imports are expected to
rise to record levels. After peaking in early 2004, a recent weakening
of the Australian dollar has provided a near-term boost to industry
competitiveness. New quarantine import conditions are allowing additional countries, including the U.S., to supply some pork products.
Industry sources expect that total pork imports will unlikely rise appreciably, but that the current suppliers will face greater competition.

Mexico will process and import
more chicken in 2005

Smithfield increases Campofrio
stake

Chicken meat production in Mexico for 2005 is forecast to increase 5
percent over 2004 as the trend toward vertical integration continues
in the Mexican chicken industry, according to the Foreign Agricultural Service. Population growth and affordable prices relative to other
meats are expected to spur demand. The safeguard agreement with
the U.S. on chicken leg quarters should continue to provide some additional protection for the Mexican industry. Turkey meat production is
also forecast to increase 3 percent for 2005, but still represents less
than 10 percent of total consumption.
Chicken and turkey meat imports, mainly mechanically separated
meat and turkey parts for use in the sausage and processed meat
industry, are by far the main poultry products imported by Mexico. Imports of these products for 2005 are forecast to increase as demand
continues to increase for M.S.M.
Mexican chicken meat consumption for 2005 is forecast to increase almost 5 percent due to population growth, the affordability
of chicken, effective marketing and improved product quality. Chicken
meat demand is relatively elastic, so changes in price result in significant changes in consumption.
Broiler consumption continues to increase because it is cheaper
compared to red meats. Increased consumer awareness of cholesterol problems is also creating greater marketing opportunities for
chicken meat. Consumers continue to prefer fresh, whole chickens to
chicken parts. Although, purchases of chicken parts are increasing
slowly, mainly in high-end supermarkets.

Smithfield Foods, Inc., Smithfield, Va., announced the company has
purchased an additional 3.8 million shares of Campofrio Alimentacion, S.A., for approximately $49 million, increasing its stake in the
Spanish pork processor
to 22.4 percent from 15.2 percent. Smithfield acquired the additional
shares recently in two privately negotiated transactions.
Campofrio is the largest meat processor in Spain and one of Europe's largest diversified meat processors, with annual sales of about
$1.2 billion. Primarily a processor of pork and further processed
pork products, the company exports to more than 40 countries. Campofrio is the market leader in Spain and has operations in Portugal,
Russia, Poland, Romania and France.

MEAT&POULTRY

Perdigao building new poultry
complex
Perdigao, the Sao Paulo, Brazil-based meat and poultry processor announced this past month it would invest $240 million (U.S.) in
building a new poultry complex based in Mineiros. When completed,
the facility will have the capacity to process 81,000 tons of poultry per
year, according to the company.

www.MEATPOULTRY.com

SEPTEMBER 2004

http://www.MEATPOULTRY.com

Meat + Poultry - September 2004

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