Suppling country outlook: URUGUAY National Meat Institute (INAC) Meat Importers Council of America MICA October, 2018 Miami
Presentation Outline 1- The US beef market for Uruguay 2- Uruguay s production and market situation, 2018 projection
1. The US beef market for Uruguay 3
Thousand CWT 1. The US beef market for Uruguay Uruguay is a small player in US beef imports (<5%) US chilled and frozen beef imports by country 1,600 1,400 1,200 1,000 800 600 400 200 OTHERS BRAZIL MEXICO NEW ZEALAND CANADA AUSTRALIA URUGUAY 2010 2011 2012 2013 2014 2015 2016 2017 Source: INAC (Global Markets Monitor). Data for 0201 and 0202 4% to 5% of US chilled and frozen beef imports in the last years. 4
The United States: A key market for Uruguay s beef industry 2017 National Meat Institute of Uruguay - INAC
Tons (shipped weight) US Share of total UY volume exports 1. The US beef market for Uruguay 2003 to 2018: the US has been the largest market 22% tons exported from UY went to the US Uruguay s refrigerated beef exports to the US and share of total exports 250,000 80% 200,000 70% 60% 150,000 Tons % UY exports 50% 40% 100,000 30% 50,000 20% 10% 0 0% 2004 2003 Source: INAC 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (est.)
Millions USD 1. The US beef market for Uruguay UY: total beef exports FOB value to US 600 500 400 300 200 100 0 2018 (est.) 2015 2012 2009 2006 2003 Source: INAC Current situation - 20 beef plants and 6 ovine plants approved for the USA - USD 233 mm annual exported FOB value (average, 3 years). 7
Usd /ton 1. The US beef market for Uruguay UY: frozen beef value exported to US 6,000 4,000 2,000 Source: INAC 0 2003 2006 2009 2012 2015 2018 (est.) - Chilled exports: 7% volume 2017. - Growing value of imported beef. - Certification programs: - Organic - Never ever, ABF, grass fed, certified natural, breed claims, others. 8
The TRQ is the largest limitation for Uruguay 2017 National Meat Institute of Uruguay - INAC 9
1. The US beef market for Uruguay The TRQ is the largest limitation for Uruguay - Uruguay has 20.000 tons of the US beef TRQ, only 2,9% of the total. - In the last 15 years, 2/3 of the volume shipped to US was OUT of quota. - For the period 2015 to 2017: - Uruguay exported 77% volume above the quota level. - USD 72 mm paid in import duties, 11% of the CIF value. - Average import tax of USD 680 / ton exported. - Above the quota level, other markets are more price competitive. 10
2. Uruguay s beef production, market situation and 2018 outlook 11
Thousand Tons (CWT) 2. Uruguay s beef production situation Stabilized production: 600 thousand CWT Ratio exports / domestic: 70/30 Exports 2018: 420 thousand CWT (slightly down -6%- from 2017 levels) 700 Uruguay s beef production 600 500 400 300 200 100 0 1998 Source: INAC 2000 2002 2004 2006 Export 2008 2010 2012 Domestic 2014 2016 2018 (est.) 12
Thousand heads 2. Uruguay s production perspective Cattle Slaughter near 2,2 mm heads (average 10 yrs) 2,800 Uruguay cattle slaughter, 2005-2018 2,600 2,400 2,200 2,000 1,800 1,600 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (est.) Source: INAC 13
Positive medium term production perspective Highest breeding cow herd in the history 14
2. Uruguay s production projection Increasing production, but also quality Angus Hereford Others Dairy Source: INAC + Angus breed in the stock + Weight + Grain finished steers and heifers Steer Cow 15
2017 and 2018 market and industry highlights 2017 - Industry acquisitions (NH and Minerva) - UY allowed to export bone-in lamb to the US - UE-MERCOSUR, FTA 2018 - Japan market access, expected first semester 2018 16
Thousand Tons (Shipped weight) 2. Export markets 2018 No significant changes are expected for 2018 in terms of the export destinations China will continue with a firm import dynamic and top destination for UY beef The US and UE as other key markets. US: similar levels, 35 thousand tons for chilled and frozen beef. 350 Uruguay beef exports 2003-2018 300 250 200 150 100 50 0 Source: INAC 2003 2004 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 ASIA MERCOSUR NAFTA UE Others 2015 2016 2017 2018 (est.) 17
Thank you! 18