Global market for beef will remain tight in 2015

by Keith Nunes
Share This:
Search for similar articles by keyword: [Beef], [Meat], [Tyson Foods]
Tyson Foods' beef business fell in fiscal 2014 on high pricing.

UTRECHT, THE NETHERLANDS — An improving economy and a strong dollar have positioned the United States as a major influence on global beef market trends, according to Rabobank’s quarterly beef report. Prices for cattle in the United States have continued at record levels on tight supplies of cattle and robust consumer demand. Rabobank analysts forecast renewed price strength and tight supplies in the first quarter of 2015.

“The U.S. continues to be the driver in the global beef market with constrained supply and strong demand keeping prices high,” said Angus Gidley-Baird, a Rabobank analyst. “A recent strengthening in the U.S. economy and dollar will support continued imports to the U.S. However, we are watching a drop in the oil price and depreciation of the Russian Ruble given Russia’s status as the world’s largest beef importer.”

The gap between premium and ground beef markets will continue to widen. Prices for prime beef will remain high in 2015, while lackluster demand and growing supplies of dairy-based beef will pressure prices for ground beef.

On Nov. 19, in a conference call to discuss year-end financial results, Donnie Smith, president and chief executive officer of Tyson Foods, Inc., Springdale, Ark., said he expected U.S. fed cattle supplies to fall 4% in 2015 and added, “but that should be the worst of it.”

“With good export demand, domestic pricing in 2015 will test how much people really want beef,” he said. “But it’s clear that demand for beef is very strong and will provide support for chicken and pork pricing.”

In Tyson Foods’ Beef business unit, fiscal 2014 volume, for the year ended Sept. 27, was down 2.6%, because pricing was up 21.5%.

Strong international demand for beef from Brazil and New Zealand will likely carryover into 2015, according to Rabobank’s regional outlook report. Brazil will see demand from Russia and China with the re-opening of its market for Brazil. Strong demand in the United States for beef from New Zealand continues to support New Zealand’s beef industry, the report said. New Zealand reported record farm prices in November. Analysts forecasted a positive outlook in New Zealand for the remainder of 2014 and into the first quarter of 2015.

In China, retail prices for beef are expected to remain stable. Rabobank noted beef consumption isn’t strong enough to push beef prices higher despite tight supplies and growing imports.

Australia continues to report record cattle slaughter numbers; total exports for 2014 are on a record-setting pace, according to Rabobank analysts. Slaughter levels are expected to remain high, keeping prices low.

Rabobank said the new year will be critical for Canada, as the beef industry decides whether it starts herd rebuilding or continues to downsize the industry.

In Mexico, low availability of cattle is partially offset by increased cattle weights, according to analysts. Meanwhile, exports from Argentina are likely to remain depressed on an overvalued exchange rate that currently makes Argentinean beef more expensive compared to other countries in the region.
Comment on this Article
We welcome your thoughtful comments. Please comply with our Community rules.

 

 


The views expressed in the comments section of Food Business News do not reflect those of Food Business News or its parent company, Sosland Publishing Co., Kansas City, Mo. Concern regarding a specific comment may be registered with the Editor by clicking the Report Abuse link.