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Agricultural News


Rabobank Find Tight Global Beef Supplies Amid Robust Consumer Demand

Wed, 24 Dec 2014 09:34:52 CST

Rabobank Find Tight Global Beef Supplies Amid Robust Consumer Demand
Rabobank has issued a new report on the global beef industry, looking at continued tight global supply of cattle and beef in Q4 2014.


In the report, published by Rabobank’s Food & Agribusiness Research and Advisory group, Rabobank says that despite tight global cattle and beef supplies, prices tempered from their Q3 highs. The U.S. remains the major global driver, with import demand affecting prices and volumes for other countries.


Rabobank says that a big question heading into 2015 with such a finely balanced market is: if Australian export rates decrease and herds in Mexico and Canada continue to be run down by the U.S., have prices reached a new norm or do they still have room to rise?


"The U.S. continues to be the driver in the global beef market with constrained supply and strong demand keeping prices high. A recent strengthening in the U.S. economy and dollar will support continued imports to the U.S., however we are watching a drop in the oil price and depreciation of the Russian ruble given Russia’s status as the world’ largest beef importer," explains Razorback analyst Angus Gidley-Baird.


Regional Outlook


-- U.S.: Cattle prices during Q4 have continued at record levels, driven by exceptionally tight supplies and strong demand.Q1 cattle supplies will again be tight with renewed price strength expected.


-- Brazil: Strong international demand for Brazilian beef is likely to be sustained in 2015 due to tight global supplies, demand from Russia and the reopening of the Chinese market for Brazil.


-- Australia: Australia continues to see record slaughter levels. Total exports for 2014 are also set for a record. With a dry summer forecast, slaughter numbers are expected to remain high, keeping prices low.


-- EU: The EU beef market is increasingly separating into a premium and ground beef market with divergent price developments. Prime beef will remain elevated in 2015, while ground beef prices will remain under pressure due to lackluster demand and growing supply from dairy-based beef.


-- China: Retail beef prices are expected to remain stable throughout the rest of 2014 and Q1 2015 as consumption is not strong enough to push prices beyond current historically high levels despite tight domestic supplies and continued growth in imports.


-- New Zealand: Very strong demand from the U.S. continues to underpin the New Zealand beef industry with record farmgate prices registered in November. The outlook remains very positive for the remainder of 2014 and into Q1 2015.


-- Canada: 2015 could be a critical year for Canada, as the country needs to determine whether it starts rebuilding or further downsizing its industry.


-- Argentina: Exports are likely to continue be depressed, as an overvalued exchange rate currently makes Argentine beef more expensive relative to other countries in the region.


-- Mexico: Low cattle availability continues to cause constraints, although this is partially offset by increased cattle weights due to lower feed costs and better pastures.


-- Indonesia: Consumption remains strong despite high prices. Following a record year of beef and cattle imports, concerns remain that trade developments between China and Australia and reduced cattle in Australia could tighten supply.


   

 

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