NEW YORK – Drought conditions in North America have created a production imbalance that will pressure global beef production and prices in the third quarter of 2012, according to a new report from Rabobank.
Rabobank is forecasting expanded global supplies of beef in 2012, driven by herd liquidation in the United States and European Union or by natural recovery in the southern hemisphere. However, supplies will begin to ease as cuts in North American grain-fed meat production take hold. Beef production in the southern hemisphere should offset some upward pressure on prices as pasture-based production systems will be better positioned to provide supplies at lower prices, according to Rabobank.
Rabobank’s Global Cattle Price Index declined 7 percent on weaker demand for beef and a stronger US dollar, according to Rabobank’s Food & Agribusiness Research and Advisory group. The Index began the third quarter down 3 percent compared to where it began in the comparable 2011 period. Beef supplies are relatively short although Brazil was the only major producer to show significant production growth, according to Rabobank.
“Longer term, global meat protein supplies, and especially beef, will continue to lag income and population growth in important emerging markets, raising volume risks to processors and price risks to everyone from feeder cattle buyers to consumers,” Rabobank’s report said.
Supplies in Brazil, Argentina and Australia are forecast to remain above 2011 levels, while beef cattle production in China has expanded on considerable investment in the industry, according to Rabobank. However, drought conditions from 2011 continue to hound Mexico, which appears set to suffer a fourth consecutive year of decline in domestic consumption, Rabobank said.