Meat + Poultry - March 2005 - 31

International News & Trends
Brazil continues to expand broiler production
Brazilian broiler production is estimated to increase in 2005, but at a lower rate
than previously forecast. The increase in
broiler production will likely be driven
by higher domestic demand and a
smaller increase in exports. Economic
analysts predict economic growth in the
range of 4 percent to 5 percent, lower
inflation, a drop in unemployment and
higher real income. These indicators are
likely to influence consumer confidence
as domestic consumption supports the
economic growth in 2005. This past
year, exports accounted for most of the
growth in the gross domestic product.
Market analysts are also cautious
because of the high interest rates in
Brazil and the appreciation of the
Brazilian currency relative to the U.S.
dollar (currently averaging 12 percent).
Brazilian poultry exporters believe that
the current Real/U.S. dollar exchange
rate (US$ 1.00 = R$ 2.70) will adversely impact exports of broilers in
2005. Currently, they are forecasting a
smaller increase in exports and lower
profitability due to the relative increase
in production costs.
The U.S. Dept. of Agriculture's
Foreign Agricultural Service's Attaché
revised estimated broiler production
in 2005 to 8.8 million metric tonnes,
up 5 percent from the record production level of 8.4 million tonnes this
past year. The increase in production
reflects a higher employment rate and
consumer purchasing power as the
economy improves; additional federal
funding for social programs to fight
hunger and improve nutritional levels
of the poor; export market expansion
that will likely continue in view of
the animal health problems faced by
different countries, mostly the avian
influenza crisis in Asia and the impact
of the B.S.E. in Canada and the United
States; continued expansion of broiler
exports to new markets such as South
Korea; and continued market promotion efforts jointly conducted and financed by the Brazilian government.
Foreign Agricultural Service officials
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MEAT&POULTRY

March 2005

project Brazilian broiler exports to increase 5 percent in 2005 as opposed
to a significant increase of 26 percent
in volume during 2004. The reason for
this small increase in 2005 is derived
from the appreciation of the Brazilian
currency (about 12 percent over the 12month period ending this past January)
and an anticipated decline in broiler
exports to Russia.

Taiwan's beef ban
prompts consumption
decline
Taiwan's ban on imports of U.S. beef
due to the discovery of bovine spongiform encephalopathy in December
2003 remains in place and continues
to impact Taiwan's red meat market.
In 2005, Taiwan's imports of beef
are forecast at 80,000 metric tonnes,
the same level as 2004, but down
significantly from the 98,000 tonnes
imported in 2003.
Taiwan's pork import increase in 2004
partially offset the reduced volume of
beef in the market, and pork imports
are forecast to grow an additional 11
percent in 2005, to 68,000 tonnes. The
country's ongoing problem with porcine
circovirus continues to depress swine
production, limiting producers' ability
to take advantage of the strong market
demand and high prices. The demand
for both beef and pork imported variety
meats is expected to remain strong for
the foreseeable future.
Taiwan is essentially dependent on
imports for its beef supply. Stagnant
hog slaughter levels and pork production will keep domestic prices high and
encourage higher import volumes.
Taiwan's pork imports in 2005 will
be further bolstered by the lifting of
tariff-rate quotas for pork bellies and
pork variety meat. Still, the overall
supply of red meat in Taiwan is down
due to the beef import ban, reducing
per capita consumption of red meat by
Taiwan's consumers.

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Australian beef industry
rebounds after drought
The Australian beef industry is expected to continue rebuilding cattle
numbers in 2005, a process that began in the second half of 2004. High
cattle prices and excellent seasonal
conditions in the lead-up to 2005
have improved industry confidence.
The cattle herd rebuilding phase
follows partial herd liquidation due
to severe drought conditions that
began in 2002 and continued into
the first half of 2004.

Closing cattle inventory is forecast to increase in 2005, while
slaughter numbers and beef and
veal production are predicted to rise
slightly. Increased domestic prices
due to improved export demand are
likely to maintain slaughter at historically high levels while allowing
inventory to increase slightly.
Live cattle exports are forecast
to decline in 2005, as strong beef
export demand reduces supplies of
cattle suitable for live export and increases supplies of cattle suitable for
slaughter. Live exports are forecast
at historically low levels, in line with
industry projections. Continued
strong export demand for Australian
beef and veal should cause export
levels to increase slightly, despite
the Australian dollar remaining at
relatively high levels.
The absence of U.S. beef in the
Japanese and South Korean markets
is driving strong export demand. If
U.S. beef were to re-enter Japan in
2005, industry officials believe Australian exports would not likely fall
from the current record-high levels.

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Meat + Poultry - March 2005

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