World Beef Report: Cattle Supplies, Brazil Exports, Consumption Shrinks
Global Production 2 Percent Lower on Reduced Cattle Supplies, Higher Input Costs and Lower Returns
Cattle supplies in the United States and Argentina are forecast lower, generating tighter beef supplies. U.S. cattle inventory is at its lowest since 1959. Increased Brazilian slaughter in recent years has reduced supplies and spurred high prices, constraining domestic and foreign consumption growth. The sector also remains plagued by bankruptcies and plant closings by key packers. Argentina faces a shortage of feed reserves, the reduction of thousands of hectares of pastures (turned into cropland or affected by drought), and a smaller corn crop. China is adversely affected by rising input costs, and low returns. Alternatively, expansion in both EU and Canadian production is based on a decline in feed grain prices and higher slaughter.
Consumption Shrinks for Most Countries, Strong Declines in Russia and Argentina
In a period of global recession, consumers would be expected to shift to lower-cost animal proteins (such as pork and poultry) and non-animal proteins (such as fish and vegetable proteins), fewer meals at restaurants and smaller portions. In the case of South Korea, for example, beef is traditionally a side dish eaten at restaurants rather than at home. Initial survey data shows that when faced with diminished incomes, consumers will reduce eating out thus reducing beef consumption. Mexican and South Korean consumption will be dampened as they face higher import prices due in part to weaker currencies vis-à-vis the U.S. dollar.
Global Imports Ease 3 Percent as Economic Downturn Hits Beef
Recession driven declines in consumption weakened Mexican and South Korean import demand. As Russian consumption contracts, imports are forecast down. Alternatively, tight U.S. supplies combined with a stronger dollar will bolster U.S. imports. EU imports are revised upward as more Brazilian farms will be eligible to ship beef to the EU.
World Exports Slump, Especially Brazil
Almost no major beef exporter will avoid the global slump in import demand. Despite a more optimistic view of sales to the EU, a reduction in Russian and Middle East imports will result in the lowest level of Brazilian exports since 2004.