From Australia to the United States and everywhere between, tight supplies of beef will be a common theme in 2015, according to the latest Rabobank Beef Quarterly report.

“Global beef supply continues to remain tight in Q1 2015, although Australian exports remain high as drought continues,” says Rabobank Animal Protein Analyst Angus Gidley-Baird.  “Continued liquidation of the cattle herd and possible improved seasons will lead to a reduction in Australia’s beef production through 2015.”

According to the report, the rate of liquidation in the Australian herd, due to drought in much of Australia’s major beef-producing regions, cannot continue at the rates in 2013 and 2014 (slaughtered 9.2 million head in 2014). High slaughter and export volumes have offset some of the tight global cattle and beef supplies, however. Despite this fact, without any global beef expansion forecast in the shorterm, Rabobank’s report says global supplies will remain tight.

In the United States, says the volatility in the first quarter of 2015 was due to a number of factors, including pressure in live cattle futures, due in part to an exit of investors and managed money in the marketplace, concern that cattle and beef prices peaked in 2014, concern that increased pork and poultry production will drive down prices for those competitive meats, thus potentially resulting in consumers picking pork and poultry at the meatcase, a disruption in consumer spending and eating out due to severe winter weather across the heavily-populated East Cost, labor disputes in West Coast ports, and more.

Rabobank projects that fed cattle prices will push into the upper $160s to $170 per hundredweight in the normal seasonal rally leading up to grilling season and then decline to a summer low of about $150. Additionally, Rabobank projects demand for replacement females to remain strong.

Throughout the report, Rabobank pointed to the strength of the U.S. dollar as a challenge for U.S. exports but as a potential opportunity for other nations to export more beef and cattle to the United States.

The report provided a snapshot of supply, demand and production in major beef producing nations around the world.

  • Brazil:  The devaluation of the Brazilian real is projected to continue, thus boosting Brazil’s export competitiveness. However, Russia, the second largest market for Brazilian beef, reduced its import quota in the first quarter of 2015. Rabobank says this development will be key for Brazilian meat exports this year.
  • Canada:  Prices for all classes of Canadian cattle have had a strong start in 2015, driven by “aggressive shipments” of feeder cattle and calves. In 2014, shipments of Canadian cattle to the U.S. were up 42 percent, and year-to-date, they are up an additional 14 percent compared to 2014 levels, according to Rabobank. Prices are projected to remain strong for Canadian cattle this year.
  • China:  Retail prices have been stable in early 2015, which Rabobank says reflects weakening demand as prices are generally higher early in the year due to the country’s spring festival. Additionally, the central government has been cracking down on the grey market for meat shipment. The report says more time is needed to review the impacts of shipments through Hong Kong before making any conclusions on the impact.
  • Mexico:  Cattle exports are projected to be strong in 2015, due most, according to Rabobank, by the strong U.S. dollar and demand for cattle from the United States. Rabobank says beef demand will be challenged in 2015 due to relatively high prices, especially compared to lower pork prices.