Lower supplies to keep EU beef price at high level
Beef prices will hit "a high level" in Europe this year, thanks to squeeze prompted by curbs on imports from South American, and a fall in home-grown supplies to their lowest for at least five years.
The EU's beef production will fall by 50,000 tonnes to 7.92 million tonnes, the lowest since at least 2005, a joint report from the USDA's European bureau said.
The drop reflects the continuing decline in the region's cattle herd, which will end 2010 at 88 million heads, down some 10 million animals over the last decade. Calf production will fall 0.8% this year.
Meanwhile, imports will struggle to make up the shortfall, with merchants viewing imports from Brazil as likely to remain "constrained" by sanitary restrictions.
According to the report, EU, which stopped Brazilian beef imports two years ago citing "unacceptable" foot-and-mouth controls, "remains critical" of the country's animal tracing regime.
In addition, imports from Argentina will remain limited by a shortage of cattle in the South American country, which was forced by drought to liquidate much of its herd last year, and has imposed export restrictions to ensure domestic supplies.
"The falling EU beef production, together with the restricted imports, will tighten the supply of beef on the domestic market further in 2010," the report said.
The robust prices would foster a marginal decline in Europeans' beef consumption, shifting demand to cheaper products such as mince and poultry, and keep exports at 150,000 tonnes, down from 253,000 tonnes five years before.
The long-term decline in Europe's cattle herd has been stoked largely by the soft milk prices and restricted levels of state support, with higher grain prices also contributing in recent years.
The decline has been particularly apparent in the dairy herd which, due to the plummeting milk market, shrank by 1.8% to 23.8 million animals last year. While the number of beef cows slipped by 0.4% to 12.2 million heads.
