US beef market to remain firm
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US beef market to remain firm – Rabobank proteins expert at Beef Australia

April 20, 2015
Even though US beef prices have eased from the record levels seen in the second half of 2014, they are expected to remain firm for the next two to three years.

That’s the message from Rabo Agri Finance vice president for Food & Agribusiness Research and Advisory Don Close, who will be presenting at Beef Australia in Rockhampton.

Based in St Louis, Missouri in the United States, Mr Close says after years of liquidation due to drought, US herd rebuilding commenced last year and while cows are being retained for this rebuilding, the prices for lean manufacturing beef should stay quite high for at least the next few years.

“In fact, given the Australian inventory and the rebuilding that will occur in Australia when it rains, I think Australia will reduce available supplies of cattle and beef before numbers rebuild in the United States to be burdensome,” Mr Close says.

“At the same time, the US continues to see solid demand for ground (minced) beef and our appetite for premium burgers has not yet peaked.”

Overall, this adds to the already ‘rosy’ picture for the Australian beef industry looking to capitalise on the strong demand in major export markets, such as the US.

Mr Close will be presenting at Rabobank’s breakfast function on Tuesday May 5 in Rockhampton and will remain at the Beef Australia exposition to share his market insights with local beef producers.

Responsible for analysing the beef and protein sectors for Rabobank in the United States, Mr Close’s wealth of experience spans high profile roles at Texas Cattle Feeders Association, AzTx Cattle Co, Future Beef Operations and Pioneer Hi-Bred International Inc.

Mr Close emphasises that obviously all [US] prices for cattle are still exceptionally high historically, with little change on the horizon.

As at April 2015, Mr Close says replacement US cows are selling at the equivalent to AUD 3,960. The full range on US cow prices are between AUD 3,600 to 5,250.

The USDA showed an increase in US beef cow numbers of 600,000 head between January 1, 2014 and January 1, 2015 which is evidence that expansion of the local herd started to take place last year.

“Expectations are for US cow numbers to build between one and two per cent per year for the next four to six years,” he says.

“As long as so many cows are being retained for expansion the prices for 90CL (lean), manufacturing beef should stay quite high for at least the next few years, and while prices will hold firm, they may return to more seasonal patterns.”

While the US herd is embarking on its rebuilding mode, Mr Close remains very optimistic about Australia’s ability to service the demand out of the US beef market allowing Australian producers to “cash in” on some positive market fundamentals in the coming years.

Rabobank Australia & New Zealand is a part of the international Rabobank Group, the world's leading specialist in food and agribusiness banking. Rabobank has more than 115 years' experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 41 countries, servicing the needs of approximately 10 million clients worldwide through a network of more than 1600 offices and branches. Rabobank Australia & New Zealand is one of Australasia's leading rural lenders and a significant provider of business and corporate banking and financial services to the region's food and agribusiness sector. The bank has 94 branches throughout Australia and New Zealand.

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Rabobank Australia & New Zealand 
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Jess Webb
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Rabobank Australia & New Zealand 
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