UTRECHT, The Netherlands – The global beef industry through the first half of the year reflects supply challenges in some markets and tailwinds in others while demand for more beef imports remains strong in China despite a trade dispute with the US, fueling trade uncertainty and volatility across the globe. Meanwhile sustainable beef production is gaining traction and resonating with some of the world’s most prominent stakeholders, according to Rabobank’s quarterly beef report, published in August.
According to the report, imports of beef into China during the first half of 2019 are up by over 50 percent over the previous year. It states the supply of beef in the US is categorized as solid compared to beef-producing countries such as New Zealand and Australia where supply is improving but still considered tight.
Prices for cattle are edging higher as production numbers drift lower in Australia. Rabobank reports the cattle herd in the country have dipped to the lowest level in 20 years, to approximately 26 million head. Through June of this year, slaughter rates exceeded the same period last year by about 14 percent to 4 million head. An increase in female slaughtered cattle is expected to result in lower herd numbers and fewer cattle slaughtered overall. Australia’s cattle on feed in Q2 topped a record-high 1.15 million head, which, the Rabobank report implies, are being grain finished based on a drought-induced shortage of fodder. Australia’s beef exports through the end of June were up 7 percent overall, to more than 684,000 metric tons (slaughter weight), thanks to a 65 percent jump in volume to China; a 7 percent increase to the US; and a 5 percent uptick to South Korea. Meanwhile, beef volumes exported from Australia to Japan dipped 9 percent.
Beef exports from Brazil in 2019 stand to set a record in volume, increasing by nearly 4 percent over last year, according to Rabobank. Shipments to China, Russia and Brazil are fueling the increase. Exports to China and Hong Kong from Brazil accounted for about 39 percent of its volume, at about 981,000 metric tons, hindered only by June shipment interruptions resulting from an atypical case of Bovine Spongiform Encephalopathy discovered in Brazil.
Domestically, Brazilians are consuming more beef as the country’s economy is steadily improving and upcoming legislation is expected to bolster the recovery and continue the growth in beef consumption there. Rabobank reports a positive outlook for Brazil’s beef industry based on the expectation of continued increases in live cattle prices (8 percent higher in July versus last year), increased production, favorable exchange rates and continued domestic and international demand. Looming challenges include the trade dispute between China and the US, the viability of the corn crop in the US and potential new slaughtering certifications in the country.
Strong demand for beef in China and favorable pricing for its exporting partners are thought to be partly due to consumers shifting away from pork as increasing prices combined with food safety concerns related to the outbreak of African Swine Fever (ASF) have consumers looking to other protein options. Beef imports in China during the first half of the year are up 53 percent over the previous year, to 311,000 metric tons. Argentina, Brazil, Uruguay and Australia are the top four exporting countries to China. Further price increases for beef are not expected, according to the report, but import growth is anticipated.
Rabobank’s report noted the marked increase in “sustainable beef-related activities across the globe” over the past year and expects the focus to continue and even increase in the coming year. Organizations including the Global Roundtable for Sustainable Beef (GRSB) have made significant headway by influencing the beef industry’s stakeholders, especially since 2012, to operate their businesses in a manner that is environmentally focused. GRSB considers sustainable beef as “a socially responsible, environmentally sound and economically viable product that prioritizes planet, people, animal and progress.” According to Rabobank, the movement has garnered significant support and momentum, influencing the practices of countries and companies known for producing and supplying beef to the world.