The Rabobank Global Cattle Price Index is up 6% since June as a tighter beef supply in exporting countries teams with rising demand in Asia. The information comes from a new report from the Rabobank Food & Agribusiness Research and Advisory Group.
In its press release, Rabobank reports that supplies will remain tight especially in the first half of 2014, driven by lower feed costs, induced herd rebuilding in the United States and strong export demand from Brazil and Argentina.
The research group forecasts continued high prices while global beef supply is expected to rise only slightly, meanwhile China's demand for imports are expected to increase. Recent announcements to reopen import markets provided added benefits as well.
In the release, Albert Vernooij, a Rabobank analyst, says: "The Rabobank Global Cattle Price Index improved further in the [second half] of 2013, supported by both continuing strong Chinese import growth and lower-than-expected supply in the main export markets making cattle prices mainly positive."
The report notes the market hasn't reached its full potential due to consumer resistance to high prices in the U.S. and EU, two key beef markets. And exchange rate movements have impacted the competitive position of exporters, giving Brazilian and Argentine beef a leg up to meet surging export needs.
The report notes that for the first half of 2014, cattle prices will remain elevated in most regions. The main question facing buyers is where to source sufficient beef supplies. With herd rebuilding a key priority globally, beef production will rise only slightly and could decline sharply in key markets, including the U.S.
Vernooij adds: "China's importance and influence on the global beef market is set to continue to increase in 2014. China's imports of both frozen and chilled beef are expected to grow further, driven by the shortage of beef in the domestic market, reflected in record high retail prices. We believe that the value of the Chinese markets will grow in excess of 10% annually over the next three years."