February 2, 2009

 

Falling world beef demand as a result of the recession, and the strengthening of the US dollar will pressurise global beef prices this year, according to international meat consultancy Gira.

 

Beef contracts were cancelled when the world financial crisis worsened last September, said Gira's UK representative Richard Brown.

 

World beef demand will see a serious short-term decline this year, led by significant down-trading to cheaper cuts and lower consumption, said Brown.

 

Demand fell in 2008, but further drops are expected this year in North Africa, the Middle East, Russia and Argentina.

 

However, the fall in world beef supply will reduce the pressure on prices, said Brown.

 

Brazil's beef production is expected to continue falling, as sharp price increases in the past three years have encouraged producers to rebuild their herd, which in turn reduced the availability of slaughter cattle.

 

Brown said the supply of slaughter cattle is likely to remain tight for the next one or two years, while exports will also decline.

 

Production is also expected to decline in Argentina, Uruguay and Australia due to herd rebuilding.

 

The impact of lower slaughter numbers in Australia is expected to be slightly offset by higher carcass weights as the country's feedlots are replenished, encouraged by falling feed costs and weakening Australian dollar.

 

Brown also said the US beef herd is currently about 2-3 years late in recovering due to pasture problems and poor feedlot margins.

 

As a result, the US has become increasingly reliant on imports of Canadian beef, which amounted to 850,000 tonnes last year. But foreign exchange difficulties and mad cow disease restrictions have disrupted the trade in recent years and Canada's production has declined.

 

World beef and veal supply will shrink about 400,000 tonnes this year, with a 3-percent drop in trade, said Gira.