Rabobank report points to global cattle price boom

A new Rabobank report points to a “fundamental” step up in global beef trade. Here’s what is impacting the record prices.

The global beef cattle market is so tight events in individual countries are having a more dramatic effect on global trade.

According to Rabobank’s Beef Quarterly report released today, localised disruptions, such as droughts and increases in consumer demand in individual countries or regions, are helping drive record beef prices.

Rabobank senior animal proteins analyst and report co-author Angus Gidley-Baird said drivers

such as herd rebuilding in Australia and a reopening food service sector in the US will eventually correct and cause an adjustment in prices.

However, with global supply remaining tight, the report points to a “fundamental step up” in the market.

Mr Gidley-Baird said in the US the country’s beef sector was squarely in a demand driven market, with April 2021 wholesale prices 18.5 per cent higher than the same time in

2019, while retail prices were 11.5 per cent higher.

For Brazil, a delay in seasonal rainfall had seen lower cattle supplies available, forcing

processors to push up cattle prices and keep supply flowing, particularly given the demand

from the import-hungry Chinese market.

Meanwhile, in China slow growth in domestic beef production — which has

not been able to keep up with the local growth in consumption triggered by the substitution

of beef for pork during the outbreak of African swine fever — had led to rising beef imports

in past years.

The report said the lowest beef cattle herd in 30 years in Australia has also been feeding into the tight global market.

Australian young cattle prices had jumped almost 30 per cent year on year in February

2020 and since risen another 20 per cent to February this year.

“While lower volumes and higher prices make competing in the global market more

difficult, the tight market situation is working in Australia’s favour and creating less

resistance to our high prices,” Mr Gidley-Baird said.

However, in an indication that the Australian sector might be beginning to see producer demand for cattle ease, the balance of buyers in the weaner cattle market is starting to return to normal, the report said.

“Compared with last year, when producers were the largest buyers in the EYCI

weaner category for many months, the first three months of 2021 has seen them occupy on average 39 per cent of the market, with (lot) feeders at 50 per cent,” he said.

Producers were, however, still paying premiums of about six per cent above the

market average.

The report also said Australian cattle slaughter numbers remain low, with the east coast cattle slaughter for April this year down 30 per cent on the same period last year and 31 per cent on the five-year average.

MORE

COVID BAN ON MARKET REPORTERS

TONGALA ABATTOIR TO GET UPGRADE

YEA SALE RESULTS