UTRECHT, NETHERLANDS – In the new Rabobank Beef Quarterly Q3 report, Angus Gidley-Baird, senior analyst, Animal Protein, said that US beef export demand is robust with a global shortage being a main driver.
Rabobank highlighted the Argentine government’s decision to impose a 30-day suspension on beef exports in May. Following that decision, new limitations were placed on the volume and type of beef that could be exported. Argentina and Canada were both the exceptions when it came to cattle prices according to analysis with dramatic contractions.
US beef is seeing a spike in demand from China and other Southeast Asian countries due to the limited global supply according to Rabobank.
“The improving outlook is currently being reflected in the prices producers are willing to pay for replacement cattle as well as deferred live cattle futures,” the report said. “While there is always concern that cattle feeders are reacting too strongly and too early, the price outlook for fed cattle for the fourth quarter and for 2022 are better than what has been seen in several years.”
However, Rabobank also pointed out that current US steer prices are 25% above 2020 and 8% higher than the five-year average for the time of year.
The report went on to say that retail and wholesale beef prices continue to be strong and resilient. Fed beef cutout values are trading largely counter seasonally.
The bank stated that nowhere are strong US beef prices more evident than in the beef trimmings market despite aggressive cow liquidation.
Beef prices in China for the quarter showed limited upside potential for the rest of the year due to production of pork and poultry continuing to grow. Still the resilience of beef prices is due to falling pork prices and limited supply.
Beef producers in Brazil have shown stability since April with an improvement on supply and lower industry demand. Limited slaughter cattle supplies, put together with seasonal issues of drought and frost drove live cattle prices to record levels in Q1.
Prices in Australia continue to push record levels in July up monthly but remain 13% below 2020 volumes and down 20% on the five-year average for the month of July. Year-to-date volumes are down 22% from last year.
In the European countries, beef production has leveled off to the same as 2020. Increases have been reported in Spain (+7%), France (+2%), Italy (+0.8%), Poland (+0.6%), and the United Kingdom (+0.4%). However, there was contraction in Germany (-3%) and Ireland (-7%).
More information on the full report can be found here.