Beef prices are expected to exhibit further declines in some countries, while others may show some stabilisation to perhaps slight increases, according to new analysis.
Production declines in certain major exporting and producing countries were more than offset by increases in other countries with global production increasing by about 1 percent in 2016. Further growth is expected over the next few years.
Informa’s Agribusiness vertical, a leading provider of analysis and forecasts across the agricultural and commodities value chain, has revealed predictions that one of the biggest drivers in reducing prices will come from the USA, the world’s biggest importer of beef (fourth largest exporter).
US per capita total red meat supplies may approach 108 pounds on retail weight basis this year, up about one and a half percent on 2016.
More beef is entering the US market in the wake of aggressive cyclical herd expansion that began in 2014.
Wholesale beef prices in 2016 were about 13 percent below 2015, while fed cattle prices declined by about 18 percent and Informa’s Agribusiness vertical expects cattle and beef prices to decline a further 7-8 percent in 2017.
'Serious drought'
Looking to other important beef exporting countries, last year for the first time since 1999 Brazil was approved to export frozen and fresh Beef to the US and Argentina was approved for the first time since 2001. This will increase competition for New Zealand and Australian beef in U.S. market.
Global beef production is overcoming a period of serious drought in certain major countries and is expected to increase consistently over the next several years.
While larger US meat production and lower prices should spur exports, slowing world economic growth and the strong US dollar may dampen growth.
In the UK, Brexit has created a dilemma for domestic beef producers, as deregulation of US beef imports could potentially lead to cheaper hormone-treated beef flooding the market and undercutting prices.
'Recovery of herd growth'
The livestock analyst group at Informa’s Agribusiness vertical commented: “In 2017 we are seeing the recovery of herd growth following serious drought in some of the world’s biggest exporting markets.
“Prices throughout the US cattle and beef supply chain have declined sharply, further pressured by larger competing pork and chicken supplies. In 2016 wholesale beef prices gauged by the beef cutout, have averaged 13 percent below the year before while fed cattle prices have plunged nearly 20 percent.
“Further but likely more moderate growth in beef production in the years ahead, accompanied by large competing meat supplies, will lead to further deflation in US beef prices at all stages of the marketing channel.”
