April 7, 2015

The world's beef market will be mainly burdened with tight supplies this year, based on a Beef Quarterly report by Rabobank.

Even with high slaughtering and beef exports from Australia due to the country's ongoing drought, straining supply remained a key trend in the first quarter of 2015, said Angus Gidley-Baird, an animal protein analyst from Rabobank.

In the short term, there is yet to be a forecast for beef expansion.

Australia could witness a lower beef output for 2015 with the possibility of better seasons and continual liquidation of cattle herds, Gidley-Baird added. However, as Australian beef-producing regions are still disrupted by droughts, liquidation of herds is not maintaining the rate seen in 2014 when 9.2 million head were slaughtered. 

Rabobank also reported on the US market which, it said, is affected by volatility in the first quarter due to pressure on live cattle futures and departing investors as well as concerns over consumer preferences for other meats and labour disputes in West Coast ports.

Fed cattle prices is expected to rise to US$160-170/hundredweight in the normal seasonal rally towards the grilling season. This will be followed by a dip during the summer, to about US$150.

The report also noted the impact a stronger US currency will have on American exports while, on the flip side, could drive international deliveries of beef and cattle to the country, especially from Mexico.

Elsewhere in the world, Canada's cattle prices began strongly for the year due to "aggressive shipments" of feeder cattle and calves. China, on the other hand, is seeing stable retail prices in early 2015, a sign of weakening demand, Rabobank said.

In addition, Brazil's export potential could increase this year with the devaluation of the real. However, deliveries would be challenged by a slashed quota of Brazilian beef into Russia, the second largest market for the meat.