Rising global supplies to drive beef markets
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Rising global supplies to drive beef markets – outlook for 2017

Rising supplies of beef are exerting downward pressure on global beef prices, with this trend expected to continue in 2017, according to a new industry report.

In its recently-released Beef Quarterly report, Rabobank says the global beef market will continue to grow in 2017, led by strong growth out of Brazil, Argentina and the US.

This is likely to keep global prices low, the report says, identifying four key developments that will influence global beef trade in the coming year.

Report co-author Rabobank senior animal proteins analyst Angus Gidley-Baird says while softer global prices will exert some pressure on Australian beef prices, they are likely to remain well above the five-year average.

“In contrast to what we are seeing globally, Australian production is set to ease slightly in 2017 – to its lowest level in over a decade – as the domestic herd continues to rebuild after years of drought,” he says.

“And it is this constrained local supply, together with restocker demand, that is expected to create a floor in the domestic beef market.”

Australia’s beef exports are also expected to remain low, Mr Gidley-Baird says, with volumes to the US and China down considerably on last year’s levels.

“In the first ten months of this year, we have seen our beef exports to the US fall by 44 per cent year-on-year, while into China they have dropped by 36 per cent.” he says.

“South Korea has bucked the trend, with exports up by four per cent, to remain a key market for Australian product.”

What to watch in 2017
The Rabobank report identifies four key developments that will influence global beef trade in 2017 – South American growth, space in the US market, China’s demand and growth in South-East Asia.

“On balance, these developments will keep a lid on global prices next year, with the capacity of the market to balance this growth in supply relying heavily on demand out of Asia,” Mr Gidley-Baird says.

Mr Gidley-Baird says much of this increased competition in the global marketplace will come out of South America, with Brazilian beef supply expected to be up by three per cent in 2017.

“This will see their export program ramp up next year, with Brazil recently gaining access to the US market and looking to pursue access into Japan,” he says. “Argentina is also set to increase their beef production, which could quickly flow into higher exports.”

Meanwhile Mr Gidley-Baird says the anticipated three per cent increase in US beef production in 2017, and the willingness of the US consumer to absorb this volume, will have ramifications not only in the US but across global beef markets.

“It will be challenging for higher supplies in the US to find relief in increased exports, particularly if the US dollar remains at current levels,” he says. “While their domestic market is also expected to be highly competitive, not only by imports but locally-produced competing proteins.”

The Rabobank report says the capacity of the global beef market to balance the growth in supply out of the Americas will rely heavily on increased demand, particularly out of Asia.

“China is expected to continue to absorb a large proportion of rising global supplies, with their import program set to increase in 2017,” Mr Gidley-Baird says.

Mr Gidley-Baird warns that demand growth remains slow in certain segments of the Chinese market and competition into China could increase, with the US expected to start shipping frozen beef into China.

“South-East Asia remains a ‘shining light’ for global beef trade”, he says, “with demand increasing rapidly.

“That said, consumers in South-East Asia remain price sensitive and much of their demand will continue to be fulfilled by domestic cattle, live imports and imported bovine from India.”

Rabobank Australia & New Zealand Group 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 40 countries, servicing the needs of approximately 8.6 million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group 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.

Media contacts:

Denise Shaw
Head of Media Relations
Rabobank Australia & New Zealand 
Phone: 02 8115 2744 or 0439 603 525 
Email: denise.shaw@rabobank.com  

Skye Ward
Media Relations Manager
Rabobank Australia
Phone: 02 4855 1111 or 0418 216 103
Email: skye.ward@rabobank.com