Volatility the key theme across beef markets – Rabobank
Volatility is a key theme across most beef markets at the moment, according to 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, he said.
Of all the global regions, Europe is the most stable beef production region right now, Rabobank has said.
It attributes this to prices strengthening slightly, supported by steady exports, in particular to Turkey, despite ample availability of beef and low prices of competitive proteins.
While there is calm in Europe in volatility terms, the US beef market is being continually disrupted by volatility.
Rabobank has said that the combination of marked week-to-week price volatility, and equal volatility in the futures market, has made marketing decisions difficult to impossible.
In Australia, cattle supplies remain tight and prices strong and Rabobank expects cattle prices in to remain strong through the third quarter, given ongoing tight cattle supplies.
Staying in the southern hemisphere and the low value of the real, high domestic prices and the slow economic conditions are expected to continue to support increased Brazilian beef exports.
Meanwhile exports to China from Brazil, which reopened in June 2015, totalled more than 70,000t from January to May, while exports to Saudi Arabia stood at more than 11,000t in the first five months of 2016, according to Rabobank.
China’s slowing economy is affecting general beef consumption, but it says that higher- and middle-income earners are supporting continued imports as they continue to seek quality beef products.
It expects beef prices to remain stable in the coming quarter, as supply and demand are likely to be balanced.