Feb 10, 1987
BRIGHTER SCENARIO FORECAST FOR BOVINE MEAT MARKETS.
GENEVA FEBRUARY 9 (IFDA/CHAKRAVARTHI RAGHAVAN) -- A "somewhat brighter scenario" for the international bovine meat trade in 1987 than in the last several years has been forecast by the Secretariat of GATT in its "international markets for meat 1986/87". "In spite of the still high supplies of all types of meat, it would seem that the price recovery initiated in 1986 in a number of markets will continue in the current year", the GATT Secretariat predicts. The GATT forecasts are however more optimistic than recent forecasts by the Food and Agriculture Organisation (FAO). In its report of January 26 to its intergovernmental group on meat, FAO had said that the short-term outlook was "for no significant strengthening of world meat demand", with overall international trade in livestock and meat tending to decline. FAO had also said that while beef prices could show some recovery in North America and Oceania, "the overall outlook is for meat prices to remain under pressure". The GATT estimates about bovine meat market is itself postulated on the GATT economists’ generally optimistic outlook of the world economy and world trade that they provided at the end of November 1986. In the present report on international markets for meat too, they have assumed a continuing improvement in economic conditions in the OECD area, and further strengthening of the world economy. GATT economists themselves do no projection of their own, but use other projections of output growth and demand to make their estimations of trade. They have apparently based themselves on the more optimistic projections of the OECD Secretariat. Most other forecasters, both international and private, have been more bearish. Recently, on January 29, the GATT Director-General had told a press conference that the outlook in the world economy – in terms of monetary and financial problems, debt crisis, etc. – was now less hopeful than many international institutions had thought in mid-1986. The GATT spokesman said the latest assessments of the GATT economists would be available early in march, when they publish their first estimations for the year. The spokesman however had no explanation available for the difference in the assessments of the GATT economists, at November end and in the meat report, and the Director-General’s own view in end-January, but suggested that the Director-General had merely been taking note of other more pessimistic assessments based on more recent data. In its report now on the meat sector, the GATT Secretariat notes that there was an increase in both volume and value of traded beef and veal, and that international demand strengthened while prices began to recover in spite of the dampening effect of large availabilities of all types of meat. The bovine meat sector in 1986, as in 1985, was affected by large availabilities of all types of meat, mainly as a result of abundant supplies of low-priced feedgrains. There was no significant volume changes in world production of bovine meat in 1986, with a number of factors balancing themselves – production rises in the U.S., Argentina and Uruguay, a lower than expected decline in the EEC, expansion in Australia and in the USSR, and fall in New Zealand and particularly Brazil. Prices of beef and veal, GATT says, began to recover in 1986 in spite of the dampening effect of large availabilities of all types of meats, with prices increasing not only on international markets but on some national market too. But while the price increases on international markets was evident in a number of major countries and for certain types of meat, it is "more hesitant and unnoticeable" in others, such as Egypt, the GATT report adds. Also, the price recovery has been from very depressed levels and is still very recent, and "to have a full positive impact on the bovine meat industry, the price recovery would have to continue". There was an increase in both the volume and value of beef and veal traded internationally. But this was mainly due to the change in situation of Brazil – a net exporter and the third largest one in 1985 becoming in 1986 a net importer and the second largest after the U.S. A large part of Brazil’s imports was of subsidised exports from the EEC (300.000 tonnes) and the U.S. (90.000 tonnes). But Uruguay’s exports too rose sharply, and a number of other countries (Argentina, Poland and Sweden) also sold bovine meat to Brazil. The Brazilian developments (from exporter to importer) helped relieve pressures on international prices exerted by large surpluses existing. As regards the outlook in 1987, GATT suggests that the majority of factors (including domestic policies and oil prices) affecting bovine meat sector in 1986 would continue to exert an extensive influence in 1987. Large supplies of low-priced feedgrains would continue to boost production of competing meats, poultry in particular, but the positive factors of 1986 would also continue to have an impact in 1987, "more than likely outweighing the negative factors". GATT estimates beef and veal output to fall in 1987 by about 1.5 percent to 42 million tonnes, as a result of drops in major producing regions – U.S., EEC, Canada, Australia, Argentina and Uruguay. World consumption is also expected to decline, but mainly reflecting forecast reductions in U.S. and Canada. Most other regions forecast rising consumption, and world consumption should thus decline less than production. It is also probable that Soviet intake would rise further, while in the middle east expansion of consumption should continue to slow down, GATT says. Taking account of "expected further strengthening of the world economy", and the evolution of both production and consumption, "conditions seem to be set for a somewhat brighter scenario for international bovine meat trade in 1987 than in last several years", the GATT Secretariat predicts. "In these conditions, and in spite of the still high supplies of all types of meat, it would seem that the price recovery initiated in 1986 in a number of markets will continue in the current year".