African swine fever re-shaping global beef markets – Rabobank Beef Quarterly

African swine fever has the potential to cause waves in global meat trade which will flow through to the Australian beef market, according to Rabobank’s latest global Beef Quarterly report.

The Q4 Beef Quarterly says the continued spread of African swine fever (ASF) through China’s pig population is resulting in increased slaughter, transport bans and volatile prices.

Rabobank senior animal proteins analyst Angus Gidley-Baird says ASF continues to spread across China, with more than 60 confirmed cases up to November 19 scattered across all the major pork-producing provinces.

“Most cases are in small-sized farms, but several were from larger-scale farms. Given the sheer size of production and the fragmented structure, it will be a great challenge for China to control the disease spreading in the coming year,” he said.

African swine fever to impact global meat trade

Mr Gidley-Baird said while a decline in China’s pork production was clear, Chinese pork consumption was also expected to drop, giving rise to increases in the consumption and import of other animal proteins, including eggs, poultry, beef, mutton and seafood.

”Although beef is not a major substitute for pork, the pork supply shortage in China will likely also push up beef consumption. Given China is already an important and growing importer of beef, depending on how pork production and prices develop, there could be increased demand from China for beef imports over the coming months,” he said.

“Australia is in a good position to supply increased Chinese beef import demand – Australia’s beef exports to China are up 43 per cent for the year to date in October – but lower slaughter numbers due to the recent reduction in the Australian cattle herd will see our overall export volumes reduced in 2019, and this would be further exacerbated by an improvement in the season, which would see producers hold on to more cattle.”

Other highlights of the global Beef Quarterly include:

Australia – season still dictating prices

Despite some rain through the eastern states in spring, conditions remain dry, and slaughter numbers elevated. However, the generally-limited supply of cattle is keeping prices firm. Rabobank expects limited supplies of heavy, finished cattle will keep prices for these cattle supported while prices for cows and younger cattle will be heavily dictated by the season.

September slaughter numbers were higher than 2017, up eight per cent year on year. Year-to-date slaughter remains 10 per cent higher than 2017, with female slaughter up 22 per cent and male slaughter down one per cent.

Beef exports saw a jump in October, up 15 per cent year on year. Strong volumes to China, South Korea and Japan supported this, up 40 per cent, 25 per cent and 15 per cent respectively year on year for the month of October.

Trade – next round of tariff cuts in Japan and Korea, and ratification of CPTPP

Reductions in tariffs on beef in Japan and South Korea appear to be having the desired effect from a beef exporter point of view. Japanese and South Korean imports this year are the highest in 10 years and up five per cent on last year. The next round of tariff reductions are due early in 2019 and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will enter into force on December 30 for the six ratifying countries.

Rabobank Australia & New Zealand Group is a part of the global Rabobank Group, the world’s leading banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 38 countries, servicing the needs of approximately 8.4 million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 93 branches throughout Australia and New Zealand.


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