Australian drought provides supply to tight global market

According to the latest Rabobank Beef Quarterly report, herd liquidation in Australia cannot continue at the high rates seen through 2013 and 2014 and without any global beef expansion forecast in the short term, global supplies are expected to remain tight.

“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.”

The dry conditions in Australian cattle regions have continued into 2015. As a result, slaughter and export volumes remain high. This continues to offset some of the tight global cattle and beef supplies experienced in 2014 and forecast for 2015.

But herd liquidation in Australia cannot continue at this rate, and without any global beef expansion forecast in the short term, global supplies are expected to remain tight.

US prices experienced a high degree of volatility in the early part of 2015 as a result of many factors. A slowing economy and lower pork and poultry prices are leading to a weak demand for beef and Chinese retail beef prices have been stable entering 2015 rather than following their normal upward trend.