World beef production to continue declining into 2010

 

 

Beef production in 2010 is expected to continue its recent decline, albeit at a slower rate of less than one percent.

 

Brazil and India are expected to increase beef production by four percent and five percent, respectively, but will not offset declining production in Argentina, China and the US.

 

Argentina's beef production is projected to fall 13 percent to 2.8 million tonnes on tighter cattle inventories. Argentina is expected to begin 2010 with a herd of 50.2 million head, down 10 percent from two years ago.

 

Drought, persisting in most of the country since mid-2007, is the main cause of herd reduction. Liquidation in 2008 and 2009 will lead to 2010 having fewer weaned calves, a smaller herd and a reduction of cows for slaughter will limit supplies.

 

Argentina's export restrictions, domestic policies capping beef prices, and reduced profit margins will also stifle investment and production.

 

Continuing reduction of China's cattle herd is also expected to hurt beef production, which will fall to just over 5.5 million tonnes. The herd is estimated to total 104.9 million head at the start of 2010.

 

Backyard producers, which account for the majority of holdings in China, were discouraged by a marketing system disadvantageous to small producers. Despite high cattle prices, production costs have increased at a faster rate, squeezing profit margins.

 

Continued outbreaks of foot and mouth disease (FMD) have also fostered uncertainty in the sector, stifling production.

 

US beef production is forecast to decline nearly two percent to 11.6 million tonnes on tighter supplies as the cattle herd has been contracting since 2007.

 

Brazil's beef production is forecast to rise four percent to 9.3 million tonnes, as Brazilian cattle herd is expected to continue expanding to 185.2 million head by 2010. Increased availability of slaughter cattle will not only enable packers to meet strong export demand, which accounts for most of the increase, but also satisfy strong domestic demand.

 

India's beef and buffalo meat production is projected to rise five percent, mainly driven by strong domestic demand. Strong export demand will also boost production.