High beef prices expected to continue, Rabobank report says
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ST. LOUIS, Dec. 26, 2013 - High beef prices are expected to continue into 2014 as supply will remain tight, driven by lower feed costs, herd rebuilding in the United States, and strong export demand from Brazil and Argentina, according to a Dec. 26 report from the Rabobank Food & Agribusiness (FAR) Research and Advisory group.
The Rabobank Global Cattle Price Index has risen by 6 percent since June. In 2014, Rabobank forecasts continued high prices while global beef supply is expected to rise only slightly, meanwhile China's demand for imports are expected to increase.
Rabobank analyst Albert Vernooij said, “The Rabobank Global Cattle Price Index improved further, supported by both continuing strong Chinese import growth and lower-than-expected supply in the main export markets making cattle prices mainly positive.”
The report said the market has been unable to reach its full potential due to consumers' resistance against high prices in the United States and the European Union, still two of the main beef markets. In addition, the report said, exchange rate movements have impacted the competitive position of exporters, resulting in Brazilian and Argentine beef becoming increasingly attractive and leading to a surge in exports.
Rabobank expects further upside for the global beef market, with cattle prices remaining elevated in most regions. “The main question in many regions remains where to source sufficient beef supplies,” the report said. “With herd rebuilding as the first priority globally, supported by improving climate conditions and moderating feed costs, global beef production will increase only slightly and is expected to decline sharply in key markets like the United States.”
The report said the “main demand wildcard” will be consumer resistance to high beef prices and the growing availability of competing animal proteins due to the improved margin outlook as feed prices tumble.
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