Rabobank Report: Higher Prices, Slowing Demand in Beef Markets a Growing Concern; Processing Consolidation Expected to Ramp Up

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Jul 20, 2011, 07:00 ET

NEW YORK, July 20, 2011 /PRNewswire/ -- Beef prices around the world will steady in the midterm, though a further significant price increase could trigger substitution with other meats, according to Rabobank's Q2 2011 Beef Quarterly Food & Agribusiness Research and Advisory (FAR) report. Additional highlights of the report, released today, include:

Tight cattle supplies carrying higher prices globally
Beef trade shaken by tsunami and earthquake in Japan
US to become net beef exporter, as exports boom and imports tighten on weaker US dollar
Softening demand in the EU and US a concern
Macro policy tightening slowing demand growth in emerging markets
Beef processing consolidation expected to ramp up

Furthermore, the report details:

Tight cattle supplies carrying prices higher globally

Finished cattle availability is still tight throughout the world, due to cattle herd rebuilding in many producing countries after years of cow liquidation and sustained unprofitability in grain-fed markets.

Beef trade shaken by tsunami and earthquake in Japan

Natural disasters adversely affected Japanese beef market, drastically reducing local production due to livestock losses and disruption to markets; however, demand was less severely impacted than production.

US to become net beef exporter as exports boom and imports tighten on weaker US dollar

The US became a net exporter of beef this year due to a lower US dollar, robust global demand driven by supply challenges in Japan and Korea, and contracting imports.

Softening demand in the EU and US a concern

Concerns are renewed among Euro regions regarding fiscal difficulties in Greece, and the resultant dampening consumer confidence; meanwhile, higher gas prices and reduced growth are hampering US demand prospects, as well as an increase in unemployment and fears of a double dip in the US housing market.

Macro policy tightening slowing demand growth in emerging markets

Authorities in both Brazil and China have actively intervened to slow their overheating economies and dampen the impending threat of inflation.

Beef processing consolidation expected to ramp up

The decline in global beef cattle inventories vs. processing capacity will likely lead to a renewed wave of industry consolidation and rationalization in primary beef processing.

Global Updates

Global beef reports involving various countries, including: Brazil, the US, the EU, Australia, Argentina, China, Uruguay, South Korea, and Japan.

Rabobank is a global financial services leader providing wholesale and retail banking for the food and agricultural industry, asset and investment management, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank today is one of the largest banks in the world, with more than $850 billion in assets and operations in over 45 countries. Rabobank is the only private bank with a triple A credit rating from both Standard & Poor's and Moody's, and is ranked among the world's safest banks by Global Finance magazine. In North America, Rabobank is a leading financial services provider to the corporate food and agribusiness industry. www.Rabobank.com

SOURCE Rabobank