In the latest Rabobank Beef Quarterly report (Q4 2019), it predicts that global beef production will experience slow growth next year, with strong demand the driving force in the market. It tips South America to drive growth, with Brazil seeing a 3.5% increase in production, China growing 2% and US production growth just below 1%.
“Although beef is not strictly a fungible product, demand and supply pressures will cause a redistribution of product among markets. Market participants will need to be vigilant for any direct and indirect impacts as supply chains are tested,” said senior animal protein analyst Angus Gidley-Baird.
African Swine Fever (ASF) continues to impact all protein markets as Rabobank expects the consumption growth to be driven by the rising epidemic. The report stated: “Not only has the shortage of pork pushed consumers to other proteins – including beef – but the price increase now means beef is relatively more affordable. In October 2018, the retail price of beef was 2.8 times that of pork, but in October 2019, it is only 0.6 times higher.”
The rise in ASF has also led to China approving numerous beef plants around the world for importing.
The report added that domestic demand in the US has been “very good” through 2019 and this is expected to continue into 2020, even with the increased supplies of competitive proteins. It suggests that with the increased demand from China, the US industry might be concerned about the rising cost of imported manufacturing beef. It also said the redistribution of trade from New Zealand and reduced production in Australia due to drought could also be long-term issues.