Brazil beef scandal leaves fewer options for global buyers

Global beef buyers will likely need to cobble together supplies from several nations if a scandal persists in Brazil’s meat sector because supply constraints and politics are already limiting trade flows, market analysts said on Monday.

China suspended imports of all meat products from Brazil, the world’s top beef exporter, as a precautionary measure after inspectors there were accused of taking bribes to allow sales of tainted food. South Korea, the EU and Chile also curtailed meat imports from Brazil.

Brazilian police on Friday named BRF SA (BRFS3.SA) and JBS SA (JBSS3.SA), along with dozens of smaller rivals, in a two-year probe into how meat packers allegedly paid off the inspectors and politicians to overlook improper practices.

China, which the U.S. Department of Agriculture calls the world’s fastest growing market for beef, accounted for nearly one-third of the Brazilian meat packing industry’s $13.9 billion in exports last year.

Australia, Argentina and Canada could fill in the gap during the ban, said Mike Zuzolo, president of U.S. brokerage Global Commodity Analytics. However, each shipper faces its own challenges in the market.

 

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