Agriculture & Food

Since this year, South America has been affected by global shipping interruptions and dry weather, which may stifle South American meat exports.

At present, the global shipping crisis has not yet been resolved, containers are still "hard to find", and freight prices have been rising all the way. As shown in the chart below, the Baltic Dry Index (BDI) has soared since this year.

What is more noteworthy is the drought this year in South America. The Paraná River is the second largest river in South America and one of the main commercial waterways in South America.

At present, the Paraná River has reached its lowest water level in 77 years, and some rivers have almost dried up, which has seriously affected the lives of residents and agricultural production in South American countries.

South American beef exporters suffer

Korni Pauls, chairman of the Paraguayan Meat Chamber of Commerce (CPC), said that due to the lack of shipping containers, soaring transportation costs and unstable transportation times, the country's meat processors may reduce their slaughter volume by 20% to 25% this month.

Pauls predicts that under the current situation, meat exports will continue to decline in the subsequent September and October periods.

The Uruguayan Meat Processing Industry Association has repeatedly warned that a large amount of beef is piled up in refrigerated warehouses, which may cause beef processing companies to have to reduce production.

However, this situation is not limited to Uruguay and Paraguay. Brazil, the world's largest meat exporter, is also deeply affected.

Marfrig Global Foods (MGF), the world's second-largest beef producer based in Brazil, said that the company's profit margin in the second quarter of this year will fall to 3.5% due to insufficient freezer and freighter space, which is far lower than the 13.9% in the same period.

In addition, Pauls also stated that some Paraguayan meat processing industries have begun shipping small amounts of frozen beef to the ports of Santos and Paranagua in Brazil at high costs. This virtually increases the transportation cost of beef.