Brazil is likely to benefit from Argentina's decision to suspend meat exports for 30 days and win more orders from key buyer China. Lygia Pimentel, director of Agrifatto, a Brazilian agricultural consultancy, points out that about 20 per cent of all meat imported to China last year came from Argentina.


"It is very likely that China will increase its purchases of [meat] in Brazil to replace imports from Argentina," she said. At this point, we should take an optimistic view of producers. And from an inflation point of view, the outlook for Brazil is not good."


The director of Agrifatto estimated that if President Alberto Fernandez's measure continues for more than 30 days, it would have a significant negative impact on the country's livestock industry. The president says he needs to limit exports to control domestic meat market prices. But Lydia believes the measure will only cause more problems.


"The problem at the moment is that the price of meat is going up in the Argentine market and in the world because of the tight supply," the official commented. These commodities need to be priced so that producers get a sufficient return so that they can invest in their production activities and then adjust their prices."


In addition, such measures can only adjust the price level in the short term, Lydia said. Over time, producers don't get the returns they expect and then they reduce their output, which ultimately leads to tighter supplies.