Export pressure mounts in beef industry

The global beef industry is expected to expand again in the coming year, with competition becoming more intense, according to Rabobank’s latest Global Beef Quarterly report.

Beef production is pegged to increase worldwide by 1.3 million tonnes in 2018. With production volumes expected to outpace domestic consumption, the report says exports will become “more critical” and “shift the balance of power in favour of importers”. 

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

“In the US, beef exports are expected to increase by 7 per cent in 2018, as their cattle herd expands for the third consecutive year,” said Rabobank senior animal proteins analyst Angus Gidley-Baird.

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

Gidley-Baird said Brazil is anticipated to increase their export program by 5 per cent in 2018.

Competition to supply beef into China will become particularly fierce, he says, “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.

Next year, China is expected to increase its import requirement to 800,000 tonnes of beef, due to the decline in its own cattle numbers.

Widespread rains across parts of Queensland and northern New South Wales had reignited producer demand, Gidley-Baird said, “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 low cattle supplies and producers’ desire to restock their herds.

“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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