Trade Unstable beef markets give challenges
“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”.
Brazil: continuing to increase exportsThe 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 consumptionChina’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 tightAustralian 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 volatilityUS 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.