Cattle prices high but stable in Q3: Rabobank
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NEW YORK – The Global Cattle Price index has stabilized after more than two years of steady declines, Rabobank's Food & Agribusiness Research team reported. Limited supplies of cattle, herd retention and strong Asian import demand have supported price increases.
Demand for beef is expected to remain strong, but Chinese imports may surge in the coming months due to the Chinese New Year in February, according to Rabobank. This development could divert Australian beef exports away from the United States to rapidly growing markets in Asia and China.
“We expect further upside for the global beef market for the remainder of the year and into 2014,” said Albert Vernooij, Rabobank analyst. “Looking forward, the main question in many regions is likely to be where to source sufficient beef supplies, given tight availability and increasing global demand.
“Globally, this will support strong prices, which might be difficult to forward to the consumers,” Vernooij added. “Nevertheless, it is positive that prices of competing proteins are also expected to remain elevated, limiting competition.”
In its market review of the global beef industry, Rabobank made several observations:
• Springdale, Ark.-based Tyson Foods' move to stop buying cattle fed the beta-agonist Zilmax rattled the market. The controversy surrounding the use of beta-agonists could negatively impact the US beef supply and prices in the future.
• Fed cattle shipments to the US from Canada declined 1 percent, while shipments of feeder cattle and cull cows surged on high feed costs and the closure of a Quebec cow processor in 2012.
• Markets in the European Union stabilized following the horsemeat scandal.
• Lower supplies of beef and strong exports drove price increases for Brazilian beef. In Argentina, exports stabilized despite a jump in production. Production in Uruguay has been relatively stable, while Paraguay recorded a 45 percent increase in production compared to a year ago.
• The story in Australia and New Zealand has been about weather conditions. Unfavorable climatic conditions caused price declines in Australia, while improved conditions throughout the winter and a favorable weather outlook for spring have raised confidence in the New Zealand beef industry.