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Rabobank Global Beef Quarterly Q2 2016

Rabobank Global Beef Quarterly Q2 2016: Volatility Challenges Beef Markets

The Rabobank global beef index ticked up in Q1 2016 after declining for much of 2015. However it shows signs of dropping again as softening prices in the US and Canada battle strengthening prices in Australia and Brazil, according to the Rabobank Global Beef Quarterly Q2 2016.

“Volatility is a key theme across most markets at the moment“, says Angus Gidley-Baird, Senior Animal Protein Analyst at Rabobank. “A range of factors are creating a degree of uncertainty, including the economy and exchange rates influencing Brazil, seasonal conditions impacting Australia, the economy impacting China, and market volatility impacting the US”.

New Zealand: eyes on the US

New Zealand cattle supplies are now tightening as the season moves into winter and farmgate prices are expected to strengthen. However, the extent of this increase will depend on how the US market reacts. The US is awash with all types of meat.

Brazil: continuing to increase exports

The low value of the real, high domestic prices and the slow economic conditions will continue to support increased Brazilian beef exports. Exports to China, which reopened in June 2015, totalled more than 70,000 tonnes from January to May, while exports to Saudi Arabia, another new market, are more than 11,000 tonnes in the first five months of 2016.

China: economy affecting consumption

China’s slowing economy is affecting general beef consumption, but higher- and middle-income earners are supporting continued imports as they continue to seek quality beef products. Beef prices will remain stable in the coming quarter, as supply and demand are likely to be balanced.

Australia: cattle supplies remaining tight

Australian cattle supplies remain tight and prices strong. Australian cattle prices are expected to remain strong through Q3, given ongoing tight cattle supplies. Buoyed by recent rains, cattle prices have again risen to record levels in June.

US: market disrupted by volatility

US market volatility continues to be a market disrupter. The combination of marked week-to-week price volatility, and equal volatility in the futures market, has made marketing decisions difficult to impossible.

Europe: calm in a sea of volatility

Europe is the most stable beef production region right now, with prices strengthening slightly, supported by steady exports, in particular to Turkey, despite ample availability of beef and low prices of competitive proteins.

ENDS

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