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Russian Bans Won’t Slow Runaway Beef Markets

06 October 2014
Rabobank

GLOBAL - Global beef supply is tightening, with most key producing and export regions already experiencing record tight supplies, according to Rabobank third quarter Beef Quarterly Report.

Further tightening is expected throughout the remainder of 2014 and into 2015.

Russian import bans are unlikely to have a large impact on world beef markets with Brazil’s industry likely to be the ban’s largest beneficiary.

The impact on major exporters, such as Australia and the US, will be minimal given increased impediments to trade with Russia prior to the current ban.
“There is largely positive news for the global beef industry as strong demand and tight supply are showing no signs of slowing, pushing prices, in some cases record prices, even higher,” said Rabobank analyst Angus Gidley-Baird.

In the US, volatility continues to characterise the market as cattle prices continue to trade at record levels, and consumer appetite remains firm.

Brazilian exports have benefitted from increased demand from Russia this quarter and will start going to China during the next six months. Strong demand and tight supplies here have underpinned record cattle prices.

Cattle prices in Australia responded on the back of some decent rainfall during August, although the dry seasonal conditions remain a concern.

Record slaughter continues to drive record exports, with strong international demand helping to support prices.

Although total Chinese imports in 2014 are expected to be lower than the record levels witnessed on 2013, demand for the remainder of 2014 is forecast to strengthen.

New Zealand beef returns have remained at record levels, and with a forecast of tight supplies and very strong US demand, industry outlook for the remainder of 2014 and into 2015 is optimistic.

The Canadian cattle market has been enjoying the same surge in cattle prices for the year as has been seen in the US and has aggressively been using all available cattle supplies.

Production is expected to increase seasonally in Argentina with improved weather, but exports continue to remain at historically low levels, despite the encouraging trade developments with the US and Russia.

Production in Mexico continues to be restrained as cattle availability remains scarce. At the end of the year, Rabobank expects beef production to increase by 0.9 per cent.

Better supply in Indonesia has resulted in softening prices, impacting finishers’ profitability.

This may cause lot feeders in Indonesia to import fewer cattle in the second half of 2014, despite issuing record permit numbers.

The EU market is expected to remain under pressure and at best stabilise, with the seasonal increase in demand unlikely to result in higher prices given the increasing competition with lower pork and poultry prices.

TheMeatSite News Desk

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