Rabobank has forecast that a tight supply from Australia, matched with high demand from China and the US, will continue to fuel demand for beef and keep prices up next year.
The Global Beef Quarterly Q4 2015 expects beef production in Brazil to grow as US price volatility eases, but predicts India and Australia’s supply power to wane. Rabobank predicts Australian beef exports to fall by as much as 20 percent.
Meanwhile, Argentina could see a sudden spike in production, as Mauricio Macri’s new government eases protectionist policies.
Consumer trends will continue to create demand for sustainably sourced beef, and the report highlights McDonald’s support for the Global Roundtable of Sustainable Beef this year.
A drop in Australian livestock numbers, particularly in breeding females, means producers expect lower slaughter levels for next year. Australian exports to the US were 66 percent lower in November this year than November 2014, despite record export levels for the year overall.
But cattle populations are expected to recover in late 2016. Plus, the gradual ratification by twelve governments (including Australia, Japan and China) of the Trans Pacific Partnership is likely to see an increase in live cattle export levels to Asia and a more regulated export market.
Rabobank estimates that India could face fewer export opportunities, estimating that Indian beef production fell between 12 and 22 percent from January to August. The country’s beef producers will be further challenged by reliance on the grey market, which makes meat harder to trace along the supply chain.
But the supply chain between North and Latin America looks as if it will stabilise next year. Brazil will access the US market, after recently getting its foot into the door in China and now Saudi Arabia. Low supply in the first quarter of next year from Australia, as well as a good count of female cattle will strengthen Brazil’s position to export more widely, and beef production expected to grow by 4 percent in 2016.
Live cattle importers such as Indonesia, faced with low herd numbers and high prices from Australia, will look to diversify the source of supply, meaning that other Pacific producers. India, Colombia, Brazil, Vietnam, South Korea and the Philippines could seize the change to increase exports there, but Australia is expected to remain Indonesia’s top beef supplier.