Disruption to South American corned beef supplies is expected to worsen as Brazilian frigorificos get further behind in servicing existing contracts.

There is simply not enough raw material to meet demand, according to sources in Sao Paulo. “UK traders refuse to understand how new markets have been established for the trimmings required for UK corned beef specifications,” said one trader.

Chile and Russia have become substantial buyers of frozen forequarter cuts which in the past could only be used in corned beef production.

High prices are obtained in the new markets and inevitably there will be a need for higher fob levels if canners have to compete with frozen markets.

The shift was prompted by all-time price lows last year, leading to producers looking for alternative markets for their raw material.

“For too long we have been at the mercy of weakening prices caused by the industry’s need to dispose of the forequarter cuts,” one packer said.

It seems Brazilian prices will rise further over the next couple of months, but whether they can be sustained in the longer term remains to be seen.

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