Argentina’s temporary ban on beef exports leaves a gap in the global markets. Micheal Clements shares how U.S. producers may benefit.
Clements: Argentina recently implemented a 30-day ban on beef exports. American Farm Bureau Federation Economist Michael Nepveux says the ban is not uncommon for Argentina, which often uses agriculture as a political tool.
Nepveux: They tend to do it periodically. In this case it’s targeting inflation. Inflation within the country has been reaching, in some reports, up to 50 percent annual inflation for this year. So, this is one of their attempts to help control and curb some of the price increases that they’ve been seeing and keep more of that beef in country, and, in their mind, hopefully slow down some of that food price inflation.
Clements: Nepveux says the move could disrupt the global beef market.
Nepveux: Argentina is the fifth-largest global beef exporter. The vast majority of their exports are going to China and they’re the second-largest exporter to China after Brazil and they make up about 22 percent of China’s beef imports. This does have the potential to tighten already tight stocks globally when it comes to beef trade.
Clements: He adds disruption may lead to more U.S. beef exports to China.
Nepveux: U.S. prices for beef, the cutout, is already starting to hit extremely elevated levels. Now, how much of that is being passed back to the producers is still a point of contention for some. But right now, at the very least in the terms of beef exports, its very positive. China has already been in the U.S. market big in the last few months before this export ban and I think that only has the potential to increase U.S. beef exports to china.
Clements: Learn more on the Market Intel page at fb.org. Micheal Clements, Washington.