MercoPress. South Atlantic News Agency

Uruguay beef exports down 31% in seven months; suppliers are targeting the domestic market with 30% rebates

In the seven month period, January/July, Uruguay exports overall decreased by 31% compared to the same period in 2022, mainly explained by lower demand from China.

Beef exports from Uruguay were down 19% in July 2023 compared to last year, according to the Uruguay XXI report. Exports in July totaled US$ 144 million, below the US$ 177 million reached in the same month last year.

In the seven month period from January to July, Uruguay exports overall decreased by 31% compared to the same period in 2022, mainly explained by lower demand from China.

The registry of goods to export from Uruguay dropped 9% in September compared to the same month a year ago, which means it is the twelfth month running that Uruguay overseas sales have fallen.

The situation reflects the slowing down of international trade, lower prices for commodities, and the fact that China has become Uruguay's main trading partner and is reluctant when it comes to prices and volumes. China and Hong Kong take mostly beef, soy beans, wood pulp and dairy produce. The only bright spot in this scenario has been rice and wood products, plus exceptional industrial sales to Mercosur partners.

Uruguayan official sources blame the drop in exports to the long standing drought, but the fact is that China as main client, in a supply market is imposing prices and conditions. This can be clearly seen in the domestic market, where supermarkets and butcher shops of the capital Montevideo, with a great campaign displaying cheaper prices for beef, with rebates of up to 30% , which was unthinkable only a few weeks ago.

Another factor pulling beef prices down in the domestic market has been the abundance of pork, imported from Brazil, which is the world's leading exporter. This is the result of another blunder of the former president Mujica administration (2010/2015) when dealing with his populist comrade Lula.

In exchange for helping Uruguay re launch its fluvial ship building industry, (Petrobras was to purchase 6 to 9 barges), Uruguay had to agree to the import of Brazilian pork. End of story, no resumption of the naval industry, but Uruguay was flooded with Brazilian pork, sending most Uruguayan pig farmers out of business, since there is no way to compete with the massive corn feed, sown with the soft loans of the Brazilian Treasury.

This means that overall Uruguayan goods exports in the nine months to September reached, US$ 8,5billion, with an 18% drop compared to the same period a year ago.