For Q3, analysts predicted that production in countries in the Southern Hemisphere – such as Brazil, Australia and Argentina – would increase due their pasture-based systems, which will enable them to produce supply beef at lower prices than those reliant on increasingly expensive grain.
North American production, on the other hand, is forecast to increase slightly as a result of herd liquidation before dropping off when “acute pain in grain-fed production” forces production cuts.
The report pointed out that the beef industry is “flourishing” in China as a result of increased production, following considerable investment in the industry. However, Mexico is looking to suffer its fourth consecutive year of decline in domestic beef consumption.
“Longer term, our view remains that global meat protein supplies, and especially beef, will continue to lag behind income and population growth in important emerging markets, raising volume risks to processors and price risks to everyone, from feeder cattle buyers to consumers,” said the report.
In Q2, Rabobank’s Global Cattle Price Index dropped 7% from Q1 levels, which analysts said was driven mainly by weaker demand and a stronger US dollar. However, they added that the downward pressure on prices would “ultimately be balanced against reduced supply, as cuts in North American grain-fed meat production take hold”.
