Global beef industry to see further growth in Q3

A NEW report on the global beef industry shows a continuing trend toward growth and higher prices in Q3 as a result of high albeit temporary supply. The research from Rabobank noted that rainfall in Australia, and drought in the United States and Brazil are pushing cattle into the system. Likewise, imports from Indonesia and China toward the end of 2014 will sustain this growth.

According to analyst Albert Vernooij, these trends are good for producers’ margins, but in the long term, these bring down feeder cattle availability as well as high costs.  “The current stabilisation gives [processors] room to regain margins, but prospects are less positive due to the approaching tight supply in most producing regions.”

In China, the largest beef importer, shipments amounted to 101,000 tonnes in the first four months of 2104 alone. This is an increase of 34% y-o-y. Whilst this is a staggering amount, it is still smaller compared to 2013 figures when imports that grew 380%.

In Australia, outlook of supply and price is subject to rainfall. Cattle slaughter went up in the first four months of the year, increasing 12% y-o-y.

The case of BSE (bovine spongiform encephalopathy, which is a progressive neurological disorder of cattle) in Mato Grosso in Brazil impacted the local industry as production costs shot up. However, even as some countries banned Brazilian beef, exports remained strong. In fact, Rabobank forecasts prices to recover by end-2104. Hansa Wattanawongsiri