Horse meat fallout has little impact on beef demand in Europe
by Meat&Poultry Staff
THE NETHERLANDS – Assessing the impact of beef in light of the horse-meat scandal throughout the European Union, as well as a summary of the challenges playing out in the North American beef market, were part of the just-released Rabobank Beef Quarterly report. In general, “The global beef industry is mixed,” the Q1 2013 report summarizes, “but overall global beef production is likely to remain constrained and demand is set to weaken,” in large part because of worldwide inflation.
And, despite the recent controversy over Europe’s horse-meat discoveries in products labeled as beef, the scandal “has had hardly any impact on consumer demand and resulting beef prices,” the report states. According to Albert Vernooij, Rabobank analyst, “The horse-meat issue was one of mislabeling rather than food safety,” which limited the effect on consumer demand for beef. He added that because the discoveries were limited processed meat products, confidence in fresh beef remains high. The fact that horse meat is widely consumed in many European countries, and is preferred over beef among some consumers, has also served to minimize the impact of the discoveries. However, governmental reaction to the scandal in the form of more rigorous traceability standards may result in the number of dedicated suppliers to increase, especially as beef supplies tighten.
The Rabobank report categorizes US beef prices for the first quarter as “a big disappointment, as exports have declined by 12 percent, due in large part to trade challenges with Russia and an increasingly strong US dollar. Analysts estimate losses among US cattle feeders for the quarter at between $100 and $200 per-head as export woes were compounded by sluggish foodservice growth and rising prices resulting in lower demand and decreasing beef production.
Rabobank’s global outlook for beef includes a forecast that beef supply this year will mirror that 2012 levels, with variations being driven by Southern Hemisphere markets, especially in Brazil, Australia, Argentina, Uruguay and New Zealand. Demand is expected to moderate as growth in worldwide disposable income slows with inflation threats looming, especially in North America and Europe.
Rabobank’s global beef outlook for other prominent markets includes China, where imports have spiked in response to stagnant production there. Australia and New Zealand have benefitted most from this growing demand. Meanwhile, weather-related declines in beef prices in these two countries are pushing production higher at processing plants. This challenges producers and feeders while packers profit in these conditions. Rabobank expects Latin American countries to realize growing margins in the beef segment thanks to ample livestock supply and thriving export demand, which will grow the beef-cattle ratio.