Scarcity/overload pincer movement traps retailers Supermarkets need short-term cover yet risk becoming exposed; Japan ban blow Crisis is turning to chaos in the meat markets as the biggest international buyers of EU output halt purchases, threatening massive oversupply within Europe, but more disruption in the livestock and processing sectors creates an immediate risk of worsening shortages. UK buyers including the supermarkets are trapped, needing short-term cover yet afraid of being exposed when falling prices devalue stocks. Traders' and policymakers' nightmare became reality on Tuesday evening when the US reacted to news of the FMD outbreak in France with an immediate ban on all animal product imports from the EU. The Americans also said they would quarantine meat imported since February 21. Other significant purchasers blocking shipments from the EU included Canada, Mexico and Australia, although perhaps the most important of all in terms of potential relevance to the UK market was Japan. The Japanese buy huge amounts of pork from the EU, especially from Denmark. Last year Danish shipments totalled well over 200,000 tonnes, more than Denmark's exports of bacon, ham and pork to the UK. This means the loss of Japan alone as an external market would create a vast structural surplus of pork within the EU. With the smaller though significant pigmeat export flow to the US also blocked and an array of other customers withdrawing business, the supply locked inside Europe appears certain to cause a price collapse. As the EU is a substantial exporter of beef, the trade bans announced by international customers will have the same effect as in the pork sector, increasing the already serious structural surplus in the internal market ­ although in the beef sector too short term disruption may cause further price rises before the collapse. {{M/E MEAT }}