Global beef prices may decline on rising US pork and poultry supply and on signs that demand from some emerging markets is weakening, Australia & New Zealand Banking Group (ANZ) said.
US pork and poultry production is up 5 per cent in 2015 from a year earlier, and a large supply of hogs is forecast over the next six months, pushing prices of competing meats lower, analyst Paul Deane said. Beef exports from Brazil were the weakest in three years in the first quarter, on lower slaughter and weaker demand. Prices in Australia may still have room to climb, as they are 90 cents cheaper than US rates, the biggest discount at any time in the decade prior to 2012, he said.
“Global beef prices are one of the last remnants of the commodity super-cycle, but fundamentals point to lower prices ahead,” Deane wrote in a report. “Financial and economic trends in some emerging markets are also unfavourable for beef prices.”
The US cattle herd as of 1 January grew 1.4 per cent from the prior year to 89.8 million head, marking the first increase in herd size since 2007, according to the US Department of Agriculture. Wholesale beef prices have climbed 5.2 per cent this year, while pork is little changed, USDA data shows. Australian cattle prices will be determined by local weather, ANZ said.
“The Australian cattle market is running its own course, however, with domestic weather and cattle supply for slaughter masking global trends,” Dean said.
A record 80 per cent of Australia’s Queensland state, the country’s biggest beef producer, is in drought after a patchy summer wet season, the government said last week. Already dry conditions may be compounded by the formation of an El Nino, which heralds a drier winter and spring in Australia’s east.
Bloomberg News, edited by ESM
