November 10, 2010

Global beef price set to surge

Beef prices are likely to further strengthen in international markets, such as Ireland, anticipated by buyers worldwide.

Prices in Irish plants are already up over US$0.15/kg for R3 steers on this time last year. But this pales in comparison the rises that have been witnessed in some of the main beef producing regions in the rest of the world.

The increase in Brazil has brought the prices that beef producers are receiving there in line with what Irish producers are receiving according to Bord Bia's beef specialist, Joe Burke.

"The majority of Brazilian cattle would be equivalent to an O grade here. The average price reported for Brazilian steers is currently US$2.74/kg deadweight. Irish O3 steers are currently averaging US$2.67/kg excluding VAT. A weaker dollar makes Brazilian beef prices more competitive in euro terms," said Mr Burke.

Currency movements can significantly affect Brazilian beef prices.

However, the increases within Europe are much more modest. UK prices are similar to 12 months ago, with some grades actually seeing a small decrease. France, Germany, Italy and Spain have all seen single digit percentage increases in prices. The recent halving of export-refund rates will also dampen returns to beef processors exporting outside the EU.

According to Mr Burke, traditionally lower-value markets are now competing for beef at prices similar to those within the EU. "International markets like the Middle East and North Africa have strengthened and are importing a lot of product, the majority of which is South American," he said.

Irish processors are also benefiting from the increased demand on international markets with exports to Russia rising significantly compared to last year.

While the wet weather of the last two weeks is bringing plenty of cattle into the beef factories at the moment, Mr Burke is predicting that supplies will tighten sooner rather than later. "We could see supplies ease in the next two weeks, which would of course be good news for Irish beef farmers," he said.