Global beef price moving in the right direction

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Rabobank’s recent report on the prospects for the international beef sector confirms that tight global cattle and beef supplies continued in the fourth quarter of 2014, although prices tempered from their third quarter highs.

The US remains the major global driver, with import demand affecting prices and volumes for other countries.

A big question heading into 2015 with such a finely balanced market is – if Australian export rates decrease and herds in Mexico and Canada continue to be run down by the US – whether a new norm has been reached for prices or whether they still have room to rise.

“The US continues to be the driver in the global beef market with constrained supply and strong demand keeping prices high, ” explains Rabobank analyst Angus Gidley-Baird.

He adds: “A recent strengthening in the US economy and dollar will support continued imports to the US however we are watching a drop in the oil price and depreciation of the Russian Ruble given Russia’s status as the world’s largest beef importer.”

In the US cattle prices during the last three months of 2014 have continued at record levels, driven by exceptionally tight supplies and strong demand. In addition, cattle supplies during the first quarter of 2015 will again be tight with renewed price strength expected.

Meanwhile, Australia continues to see enhanced slaughter levels.

Total exports for 2014 are also set for a record. With a dry summer forecast, slaughter numbers are expected to remain high, keeping prices low in that region.

The EU beef market is increasingly separating into a premium and ground beef sectors with divergent price developments.

Prime beef will remain elevated in 2015, while ground beef prices will remain under pressure due to lacklustre demand and growing supply from dairy-based beef.

In China, retail beef prices are expected to remain stable over the coming months as consumption is not strong enough to push prices beyond current historically high levels despite tight domestic supplies and continued growth in imports.

One of the most interesting developments anticipated in 2015 is the envisaged access of Irish beef on to the Chinese market.

Veterinary inspectors from China visited redmeat plants in the Republic of Ireland prior to Christmas.

If all goes according to plan, Irish beef could be on Chinese shop shelves before the end of June next year.

This could have exciting implications for the beef market on the island of Ireland as a whole.