Rabobank Report: Global Beef Industry Q3 2014

Russian Bans Won't Slow Runaway Markets

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Oct 03, 2014, 12:09 ET

NEW YORK, Oct. 3, 2014 /PRNewswire/ -- Rabobank has issued a new report on the global beef industry, saying that although supply is increasingly tight, Russian import bans are unlikely to have a material effect.

In the report, published by Rabobank's Food & Agribusiness Research and Advisory group,
bank analysts say that global beef supply is in a tightening phase, with most key producing and export regions already experiencing record tight supplies. Further tightening is expected throughout the remainder of 2014 and into 2015.

Rabobank believes that Russian import bans are unlikely to have a large impact on world beef markets, with Brazil's industry likely to be the ban's largest beneficiary. The impact on major exporters, such as Australia and the U.S., will be minimal given increased impediments to trade with Russia prior to the current ban.

"There is largely positive news for the global beef industry as strong demand and tight supply are showing no signs of slowing, pushing prices, in some cases record prices, even higher," explains Rabobank analyst Angus Gidley-Baird.

Regional Outlooks

U.S.: Volatility continues to characterise the U.S. market as cattle prices continue to trade at record levels, and consumer appetite remains firm.
Brazil: Brazil exports have benefitted from increased demand from Russia this quarter and will start going to China during the next six months. Strong demand and tight supplies have underpinned record cattle prices.
Australia: Cattle prices responded on the back of some decent rainfall during August, although the dry seasonal conditions remain a concern. Record slaughter continues to drive record exports, with strong international demand helping to support prices.
China: Although total Chinese imports in 2014 are expected to be lower than the record levels witnessed on 2013, demand for the remainder of 2014 is forecast to strengthen.
New Zealand: New Zealand beef returns have remained at record levels. With a forecast of tight supplies and very strong U.S. demand, industry outlook for the rest of 2014 and into 2015 is optimistic.
Canada: The Canadian cattle market has been enjoying the same surge in cattle prices for the year as has been seen in the US and has aggressively been using all available cattle supplies.
Argentina: Production is expected to increase seasonally with improved weather, but exports continue to remain at historically low levels, despite the encouraging trade developments with the U.S. and Russia.
Mexico: Production continues to be restrained as cattle availability remains scarce. At the end of the year, Rabobank expects beef production to increase by 0.9%.
Indonesia: Better supply has resulted in softening prices, impacting finishers' profitability. This may cause lot feeders to import fewer cattle in 2H 2014, despite issuing record permit numbers.
EU: The market is expected to remain under pressure and at best stabilize, with the seasonal increase in demand unlikely to result in higher prices given the increasing competition with lower pork and poultry prices.

For more information about this publication please contact its authors:

Angus Gidley-Baird: [email protected]

Matt Costello: [email protected]

Rabobank Group is a global financial services leader providing wholesale and retail banking, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank is one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries. In North America, Rabobank is a premier bank to the food, beverage and agribusiness industry. Rabobank's Food & Agribusiness Research and Advisory team is comprised of more than 80 analysts around the world who provide expert analysis, insight and counsel to Rabobank clients about trends, issues and developments in all sectors of agriculture. www.rabobank.com/f&a

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SOURCE Rabobank