Overview Beef Quarterly Q1 2019
Following the outbreak of ASF in August 2018, the Chinese government strengthened border controls. Rabobank believes the increased enforcement measures have led to the sharp decline in the volume of trade through unofficial channels in Q4 2018. The increased Chinese border enforcement has slowed unofficial bovine trade from Hong Kong and Vietnam. Subsequently the Vietnamese imports of Indian carabeef in Q4 2018 went down 60% YOY at 120,370 t and in turn Indian buffalo prices have dropped.
ASF is now widespread across China. “Despite pork consumption dropping, we estimate that production drops will be deeper, leaving a supply gap of some 1 to 2 Mill. t for 2019,” according to Angus Gidley-Baird, Senior Analyst – Animal Protein. “This will be partially filled by other meats, including poultry, beef, sheepmeat, and seafood. Due to the size of the pork market in China, additional imports and meat substitution cannot make up for the decline in pork production, and we expect all meat prices to rise in Q2 of 2019.”
In December, the USDA reclassified Beef Products Incorporated Lean Fine Textured Beef to now meet the definition of ground beef. This means LFTB can be incorporated into lean beef without separately disclosing it. This reclassification provides opportunities for better use of fattier grades of trim and will influence the demand for leaner trim.
Brexit presents a potentially significant disruption in Europe, as the UK is a big importer of beef from the EU-27. Rabobank’s view is that UK beef imports will change little, if at all, during 2019. However, a hard Brexit will bring changes over time as beef exporters compete to access the relatively high-value UK market, with intra-EU trade flows potentially disrupted as a result.
Approximately 13 Mill. ha of northern Australia cattle country were impacted by floods in early February. Large numbers of stock have been killed and while it will be some time before the actual numbers of stock affected can be determined, it is estimated that the area that received heavy rains contained about 1 Mill. head of cattle.