According to a new report from Rabobank, global beef supplies will remain balanced over the next 12 months. Meanwhile, North American cattle prices climb to historic highs. Looking forward, the Argentine elections, scheduled for October, will be a key factor to watch.
Increased production in Brazil and Australia will offset declines in the US. With production expanding, both Brazil and Australia are relying on an increase in export volumes as domestic consumption remains static or in decline. China was considered a growth opportunity as the country emerged from Covid-19 lockdowns in late 2022. However, Chinese imports are expected to slow in Q2 and potentially decline in Q3 given the slow pace of market recovery.
North American cattle prices at all-time high
“While global supplies remain balanced, cattle prices in the US and Canada push into new record territories,” says Angus Gidley-Baird, Senior Analyst – Animal Protein at Rabobank. “This is driven by declining production volumes and firm demand. It stands in contrast to other beef producing and exporting countries, which have declining or steady cattle prices. The spread between US cattle prices and those in other countries is the largest in the history of Rabobank’s index. We expect it will start to impact trade flows, with a redistribution away from the more expensive US product to cheaper Australian and Brazilian product.”
Will the Argentine elections impact the global beef supply?
“The landscape of Argentina’s beef industry is changing,” explains Gidley-Baird. “Despite export restrictions in an effort to curb rising inflation and limit rising beef prices, beef exports have increased. This is partly due to increased Chinese demand.”
However, changes might be on the way with Argentina’s presidential election scheduled for October this year. The most recent poll in April indicates the top three candidates are from opposition parties. Gidley-Baird: “These parties support a freer market and the removal of protectionist measures such as export restrictions. While existing export restrictions have not reduced export volumes, removing these measures may actually lead to further increases in exports.”
Source: Rabobank. To view the full report online click here