Beef production in the European Union, the world's third largest beef producer, is expected to  fall four percent this year in comparison with 2011, forecasts released this month show.

The assessment comes despite an anticipated 29pc decline in exports this year. It means the EU will import more beef and other countries that previously imported EU beef will have to look elsewhere for their needs.

The US is unlikely to be able to gain much advantage of the EU’s need to import beef because it is already struggling to fill its larger quota for non-implanted high quality grainfed beef – a segment serviced also by Australia.

The EU forecasts show how improved global demand for beef at a time of reduced production in major beef nations is causing cattle prices worldwide to reach record high levels. EU cattle prices reached record highs in 2011 and will remain high in 2012, despite a decline in exports of both meat and live animals, says the European Commission in its latest forecasts.

The elevated cattle prices will be due largely to limited supplies, with increased competition for earlier-marketed finished cattle helping to offset higher feeding costs, says the Commission.

It forecasts EU beef and veal production for 2012 at 7.915 million tonnes, down 4pc from 8.222 MT in 2011. After a strong year for beef and veal exports in 2011, particularly to Russia and Turkey, EU beef and veal shipments are forecast to fall 29pc this year to 235,000MT.

In contrast, EU beef imports are forecast to recover somewhat in 2012, as tight domestic supplies and a gradual recovery in availability of supply from traditional suppliers helps to rejuvenate import volumes.

However, the Commission says while imports are forecast to increase 10pc or 30,000MT, overall beef consumption is still predicted to fall another 2pc. Tight global supplies of beef in 2011 led to falling imports into the EU, while at the same time, the very weak EU currency assisted exports, forcing domestic cattle prices higher.

The EU Parliament on March 15 formally approved the proposal to increase the EU High Quality Beef (HQB) grainfed tariff rate quota from 20,000t to 48,200t.

The increase will take effect from August 1. The approval of the increase finalises a 16-year trade dispute between the EU and the US and Canada.

Data from the EU commission reveals that the US is the largest user of the current 20,000t allocation, with Australia also making significant use of the quota. In the nine months to February 2012, the US had received allocations of 12,233t out of a total of 15,000t.

License allocations for Australia were 2029t, while New Zealand and Canada both only secured small allocations of 208t and 152t, respectively.

Uruguay, the other nation eligible to use the quota, is yet to secure any allocations for 2011-12.