The Dutch bank’s Beef Quarterly Q4 reports that tight global cattle and beef supplies continued in the fourth quarter in 2014, although prices tempered from their Q3 highs.
But the researchers say they are keeping an eye on oil prices and watching out for any further slide in the ruble, given Russia’s status as the world’s largest beef importer.
Currency became a key issue in global trade in Q4, said the beef market specialists, with a steady climb in the US dollar and loosening monetary policy in Europe. "In addition, a collapse in oil prices in Q4 and ongoing sanctions have seen the Russian economy come under severe pressure and the ruble devalue dramatically. Extreme supply tightness combined with robust consumer demand and a stronger US dollar will limit US exports and drive strong US imports in 2015," said the report.
Some very significant market access agreements have been bedded down in Q4:
"Australian and China announced a Free Trade Agreement (FTA) leading to a gradual removal of tariffs for the importation of beef and live cattle into China. China officially reopened the market to Brazil. New Zealand announced an FTA with Korea and Australia's previously announced FTA with Korea was approved by both countries and came into force on 12 December," reports the review.
The analysts also note how Brazil and Indonesia have been in discussion over live cattle trade while the US is continuing to hold talks with China over beef market access.
In their regional outlook, the Rabobank researchers say Q1 2015 cattle supplies in the US will again be tight with renewed price strength expected.
They note how strong international demand for Brazilian beef is likely to be sustained due to tight global supplies, demand from Russia and the reopening of the Chinese market to Brazil.
Australia, says the report, continues to see record slaughter levels. Total exports for 2014 are also set for a record. With a dry summer forecast, slaughter numbers are expected to remain high there, keeping prices low.
EU premium and ground beef divergence
The EU beef market, say the analysts, is increasingly separating into a premium and ground beef market with divergent price developments.
Prime beef will remain elevated in 2015, while ground beef prices will remain under pressure due to lackluster demand, notes the review.
Looking at China, the researchers forecast that retail beef prices will remain stable in Q1 2015 as consumption is not strong enough to push prices beyond current historically high levels despite tight domestic supplies and continued growth in imports.
Record farmgate prices for New Zealand producers
Very strong demand from the US continues to underpin the New Zealand beef industry with record farmgate prices registered in November, with the outlook looking very positive for the first quarter next year.
The researchers say 2015 could be a critical year for Canada, as the country needs to determine whether it starts rebuilding or further downsizing its industry.
Meanwhile, in Argentina, exports are likely to continue be depressed, as an overvalued exchange rate currently makes the country’s beef more expensive relative to other countries in the region. Low cattle availability in Mexico continues to cause constraints, although this is partially offset by increased cattle weights due to lower feed costs and better pastures.
In Indonesia, beef consumption remains strong despite high prices, reports the Rabobank review. Following a record year of beef and cattle imports, concerns remain that trade developments between China and Australia and reduced cattle in Australia could tighten supply.