Global beef market prices forecast to strengthen
Rabobank’s report, Beef Quarterly Q2 2014, said that supply will tighten, strengthening prices. However there are number of ‘wild cards’ – rainfall in Australia, continued drought in the US and Brazil, and Indonesian import development during Ramadan festivities. Furthermore, high prices may cause consumers to choose pork and poultry instead.
Rabobank analyst Albert Vernooij said: “The continuing positive market fundamentals will be encouraging for producers’ margins. However, longer term, the likely lower availability of feeder cattle and high production costs might limit the possible upside.
“For processors, the current stabilisation gives them room to regain margins, but prospects are less positive due to the approaching tight supply in most producing regions.”
In the EU, beef prices are expected to stabilise around the current levels into the summer, with the potential for some upside later in the year due to stable supply, strong export demand and high-priced competing proteins.
The US has seen cattle and beef prices subside a little after all-time record price levels during Q1. However, seasonal price pressure is starting to weigh on the market, as are expectations that more fed cattle will be making their way to the market soon.
Boxed beef exports have reached record levels in Australia after increased slaughterings earlier in the year, but the outlook is dependent on rainfall. Prices suffered in Brazil due to the discovery of a “new atypical case of BSE”. However, early reporting allowed the country to keep its ‘insignificant risk’ status. Strong exports remain and prices are expected to recover in Q3 and Q4.
Chinese import volumes remain historically very high, increasing 34% year on year in the first four months of 2014. This is, however, a much smaller increase than in 2013, when they grew by an amazing 380%. Canadian exports are running at a high level due to record price levels in the US, while anticompetitive exchange rates and export taxes have stopped Argentina from performing well in exports.
