Tight Global Beef Supplies Forecast for 201306 February 2013
The global beef market is expected to be characterised by tight supplies amongst key exporting countries throughout 2013, according to the Global and European beef market update from Bord Bia.
Amongst the key exporting countries, global beef output in 2013 is expected to fall on 2012 levels. Any recovery in production anticipated across South America and Australia in 2013 will be offset by lower output in the United States, as stronger feed prices impact on output. Beef production is expected to fall slightly to 25.7 million tonnes.
Global demand for beef is fundamentally strong. However, exports amongst the key countries are predicted to fall by 1% to 4.77 million tonnes in 2012, with the US and Argentina being responsible for this drop. In the case of the US, the effects of declining cattle numbers are now being felt. While export taxes and currency strengthening is reducing Argentinean trade.
A recovery of almost 6% in global exports amongst the five global exporters is expected in 2013. However, the extent of this recovery will be based on combination of different factors. These include global demand from emerging markets, some increase in Brazilian output combined with a fall in US consumption which will more than offset a slowdown in US production.
- Beef output amongst ‘the big 5’ in 2013 to ease slightly to 25.7 million tonnes.
- Lower Argentinean beef exports forecast for 2013.
- Global exports to increase by 6% on the back of increased Brazilian output and lower US consumption.
- EU output to fall slightly in 2013. A decrease in French, German and Italian supplies will be partly offset by higher Irish output.
- Strong import demand evident in the MENA, Asia and Russia.
- Irish cattle supplies to recover by 10%.
- European consumer demand will remain under pressure in key markets such as Italy, France and Spain during 2013.
Against a background of diverging economic growth amongst the main global importers, consumer demand in the EU, Japan and the US is being helped by consumers switching to better value cuts.
Import demand from key regions such as Russia, the MENA (Middle East, North Africa) and Asia continue to absorb excess ‘big 5’ exports.
EU beef production is expected to fall by over 5% to 7.7 million tonnes in 2012, with male beef output falling the furthest. Output will remain under pressure in 2013, reflecting some further tightening in French, German and Italian supplies, which will be only partly offset by higher Irish output and to some extent, slightly higher UK and Swedish output. Cow beef production though could well edge up because of feed shortages, combined with a weaker milk market in some member states.
EU beef imports are expected to fall by almost 7% in 2012 due to stronger demand across international markets for tight South American supplies. Higher Turkish import tariffs are expected to restrict exports. Some recovery in EU imports is forecast for 2013.
Import demand from the UK is likely to remain strong going into 2013 on the back of favourable exchange movement. UK output in 2013 is expected to show some slight upward movement, as production is forecast to reach 892,000 tonnes.
Demand for beef is expected to fall in France in the short term, reflecting challenging economic conditions and a decline in domestic supplies. For 2013, consumption is expected to fall by just over 1% to 1.61 million tonnes.
A decline in German shipments has led to a reduction in import levels, due to higher German export prices and a reduction in consumer purchasing power. Most of the fall in shipments has occurred in non EU markets, such as Turkey and Russia.
Subdued consumer demand in France, Italy and Spain is expected to persist. For 2013, beef consumption is expected to fall by 2% in Italy, and 1% in both Spain and France.
European cattle prices have firmed by 11% across most EU markets during 2012.
Irish cattle prices performed strongly throughout 2012, with a rise of 12% evident for steers and 13% for heifers. Irish prices exceeded the European average up until the beginning of September. The weakening of the value of the Euro against Sterling has benefited Irish exports to the UK.
Irish finished cattle supplies for 2012 were equivalent to 1.4 million head, which compares to 1.57 million head on prior year levels. Next year, this is likely to recover by around 10% reflecting the reduced level of live exports in 2011 combined with higher calf registrations.
Global Beef Production and Export Availability
Forecasts for the main global beef exporters for 2012 show some increase in beef supplies, particularly in Brazil and Argentina, as combined supplies are expected to increase by almost 4% to 11.42 million tonnes. However, any increase in global output will be somewhat offset by on-going tight US supplies, with production expected to increase by just 1% to 25.84 million tonnes amongst the key global producers.
|Global Beef Output & Exports (‘000 Tonnes cwe)|
|Source: Bord Bia estimates based on Safras, INAC, USDA, MLA|
For 2013, virtually the same pattern of production is expected. However, the rate of decline in US output should be more pronounced. The rate of growth in the other key countries is expected to slow down. Total output amongst the ‘big 5’ is forecast to decline slightly to 25.7 million tonnes.
The volume of beef available to export looks set to fall again in 2012 on the back of tight Argentinean and American supplies, as higher export taxes in Argentina and the US drought situation affects supplies. For the year, exports from the five leading exporters are forecast to fall by 1% to 4.77 million tonnes. This weakening in trade is being offset by stronger Brazilian and Uruguayan exports, helped by some depreciation in their domestic currency. A recovery of almost 6% in global exports is expected for 2013. Recent IMF growth projections suggest that most global economies will recover next year. This should lead to an increase in demand for beef in key regions.
World Chilled/Frozen Beef Export Prices
Global Steer Prices as a % of the EU Average
Global R3 Steer Prices, c/kg excl VAT
Global export prices for beef have been largely stable in 2012. In January-September 2012, the average price for chilled and frozen beef in Brazil and Uruguay was 3% and 5% stronger, respectively, on prior year levels. Argentinean prices were 14% higher due to strong domestic cattle prices. Export prices have been firm for the United States, with prices 28% higher year-on-year during the 2012 Jan-Sept period. Australian export prices have been 12% higher for the same period in 2012.
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