Wednesday 24th Oct, 2018

Tough beef on the horizon

Photo: NSW Farmers
Photo: NSW Farmers

GLOBAL beef markets are looking to get tough in the coming year, according to Rabobank’s Global Beef Quarterly Q4.

With global beef production pegged to increase by 1.3m tonnes next year, Rabobank expects production volumes to outpace domestic consumption, thereby shifting the balance of power in favour of importers.

The US and Brazil are likely to see the biggest increases in beef exports, but according to the report, expansion in global production will come out of all major producing areas, including Australia.

Rabobank senior animal proteins analyst, Angus Gidley-Baird, said US beef exports were expected to increase by 7% in 2018 as the cattle herd expands for the third consecutive year.

“While beef consumption is also expected to increase it will not keep pace with their production growth, and exports are expected to grow 12% of US production,” he said.

Meanwhile, Brazil is expected to increase its export program by 5% next year, with plans afoot to accredit an additional 11 beef plants to access the Chines market.

If successful, Mr Gidley-Baird said Brazil would have 27 beef plants able to access the Chinese market.

Competition to supply beef into China will become particularly fierce, he said, “not only for Brazil, but also for the US and Australia”.

“China’s import demand will be pivotal to balancing the increase in global exports,” he said.

“And next year, China are expected to increase their import requirement to 800,000 tonnes of beef, due to the decline in their own cattle numbers.”

Mr Gidley-Baird noted that widespread rains across parts of Queensland and northern New South Wales have reignited producer demand, “shaking cattle prices out of their declining trend to rise through October and into November”.

“Seasonal conditions are expected to drive large swings in prices into the first half of 2018, given the low cattle supplies and producers’ desire to restock their herds,” he said.

“While domestic cattle producers will face some headwinds from increased global competition in 2018, limited domestic cattle supplies should continue to support a strong Australian market.”

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