Beef prices in Argentina are poised to soar over the coming months — fresh fuel for inflation already galloping at 116% annually in a country that eats the most red meat in the world.
(Bloomberg) — Beef prices in Argentina are poised to soar over the coming months — fresh fuel for inflation already galloping at 116% annually in a country that eats the most red meat in the world.
Argentine beef inflation has stayed in check this year as ranchers flooded cattle markets because of a brutal drought that frazzled pastures, providing ample supply to butcher shops.
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Beef cuts sold in stores in the Buenos Aires metro area, home to nearly a third of Argentines, cost 72% more in June than a year earlier. While that may sound high, it pales in comparison to overall inflation, which is comfortably in triple-digit territory.
A recent decision to temporarily weaken the exchange rate for corn exports — designed to spur shipments abroad — has bumped up domestic feed costs. Prices paid for livestock have therefore swelled over the last couple of weeks and are trickling down to supermarkets and butchers.
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What’s more, as rains return to the Pampas farm belt — albeit slowly and unequally — ranchers are starting to take the opposite approach to drought times, keeping cows in replenished fields to rebuild herds. That will tighten supplies to meatpackers, pushing up both cattle and beef prices over the rest of the year.
“When the rains start falling normally, pastures will recover and farmers will withhold cattle,” said Miguel Schiariti, head of beef industry group Ciccra and a rancher himself.
Beef prices could rise 40% by October from June’s levels, according to Ciccra — though Schiariti said predicting the magnitude of the increase is tough after the corn measure and the faltering rains.
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The timing couldn’t be worse for Economy Minister Sergio Massa, who is the ruling Peronist party’s main presidential candidate, before a key primary election on Aug. 13 and the main vote on Oct. 22.
Argentine voters vie with their neighbors in Uruguay as the biggest per capita consumers of red meat on the planet. Massa is already struggling to fight annual inflation. Food, clothing and home appliances have all driven the print, and fuel hikes at the pump show no sign of respite.
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