Global beef prices to remain high: Rabobank
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NEW YORK – Market forces are supportive of high global prices for beef heading into 2014, according to a the Rabobank Beef Quarterly report for the fourth quarter.
Beef supplies will be tight, especially in the first half of 2014. Firm export demand from Brazil and Argentina combined with increasing demand for beef imports to China will be supportive of strong prices, according to Rabobank. Meanwhile, lower feed costs and induced herd building will result in only slight increases in the global beef supply.
"The Rabobank Global Cattle Price Index improved further in H2 2013, supported by both continuing strong Chinese import growth and lower-than-expected supply in the main export markets making cattle prices mainly positive," said Albert Vernooij, Rabobank analyst.
Rabobank expects cattle prices to remain high in most regions for the first half of 2014. Sourcing sufficient supplies of beef will be a challenge. Improving climate conditions and cheaper feed are supportive of herd rebuilding, but global beef production will increase only slightly and may sharply decline in key markets like the US, according to Rabobank. However, impact of consumer resistance to higher prices for beef and the availability of competing animal proteins remain unknown.
"China's importance and influence on the global beef market is set to continue to increase in 2014," Vernooij noted. "China's imports of both frozen and chilled beef are expected to grow further, driven by the shortage of beef in the domestic market, reflected in record high retail prices. We believe that the value of the Chinese markets will grow in excess of 10 percent annually over the next three years."
Another upside for global beef trade is the removal of trade barriers. For example, the Trans-Pacific Partnership includes set initiatives to improve trade between five beef-exporting countries. The removal of trade barriers combined with lower feed costs should support renewed investment in the global beef industry, according to Rabobank.