We all know U.S. cattle and beef supplies are tight, leading to record-high prices for all classes of cattle this year. We aren’t alone according to a new report from Rabobank, which shows beef supplied tightening globally, and particularly in some key beef-exporting nations. And while global beef demand remains strong, that tightening of supplies is likely to continue through next year according to the report, meaning producers here and internationally should continue to enjoy unusually high cattle prices.
Brazil has benefited from strong export demand, particularly from some countries closed to U.S. beef. Russia, which has halted imports of U.S. meat products in response to sanctions related to its aggression in Ukraine, has stepped up imports of Brazilian beef. Brazil also will soon be able to resume shipping beef to China. But as those markets consume a larger share of Brazil’s beef exports, other markets open up for the United States and other exporters such as Australia.
Speaking of Australia, that nation has seen a significant increase in cattle slaughter, particularly cow slaughter, over the past two years in response to severe drought. Export demand has helped support prices in Australia through the liquidation, but supplies of Australian beef are likely to tighten due to the diminished cow herd. The Australian cow herd stood at 29.2 million in 2013, but is projected to drop to 26.1 million for 2015.
Here in the United States, 2014 beef production through August is down 5.6 percent compared with the same period last year, while federally inspected slaughter is down 6.4 percent, steer and heifer slaughter is down 4.6 percent, dairy cow slaughter is down 12 percent and beef cow slaughter is down 17 percent. The short supply of beef, particularly of lean beef for grinding, has driven U.S. imports to higher levels. Through August, 2014 beef imports are up by 36 percent from Australia, while imports from New Zealand, Canada and Mexico are up 3, 11 and 7 percent respectively.
Other key points from the Rabobank report include:
- Total Chinese imports in 2014 are expected to be lower than the record levels of 2013, but demand for the remainder of 2014 is forecast to strengthen.
- New Zealand beef returns have remained at record levels, and with a forecast of tight supplies and very strong US demand, industry outlook for the remainder of 2014 and into 2015 is optimistic.
- The Canadian cattle market has been enjoying the same surge in cattle prices for the year as has been seen in the US and has aggressively been using all available cattle supplies.
- Production in Argentina is expected to increase seasonally with improved weather, but exports continue to remain at historically low levels, despite the encouraging trade developments with the US and Russia.
- Mexican beef production continues to be restrained as cattle availability remains scarce. At the end of the year, Rabobank expects beef production to increase by 0.9 percent.
“There is largely positive news for the global beef industry as strong demand and tight supply are showing no signs of slowing, pushing prices, in some cases record prices, even higher”, says Rabobank analyst Angus Gidley-Baird.