Wednesday, 18 December 2013 15:41

Report upbeat about beef

Written by 
Rabobank analyst Matt Costello Rabobank analyst Matt Costello

STRONG INTERNATIONAL demand and tight local supply augur well for beef producers in 2014, says a new report by Rabobank.

Decline in beef production, notably lean beef in New Zealand's biggest market, the US, means NZ product will be in demand, says report co-author Matt Costello.
New Zealand's production is also expected to be lower in 2014 compared to the drought-induced surge in 2013, he adds.
"The overall increase in processing levels through 2013 was the direct result of a high cow kill, as more cows were carried over from 2011/12 due to favourable pasture conditions in New Zealand."
Costello says New Zealand beef production in 2014 will likely be limited by dairy herd expansion but minimal decline in beef cattle numbers. The past decade's rapid growth in dairy is expected to slow as land availability and environmental pressures and regulations grow, he adds.
Exporters will see increased interest from the US but competition from Indian buffalo meat will likely limit growth in exports to some South East Asian and Middle Eastern markets.
Globally beef production is forecast to remain relatively steady compared to 2013 but the US, like New Zealand, will experience a significant decline in production.
"The urgency to rebuild the US herd is becoming ever more pressing due to the ongoing liquidation over the past three or so years," says Costello.
"If weather permits, US producers will need to grow cattle numbers which are now at 60-year lows. With tight US supply forecast for 2014, this will help drive strong demand for New Zealand product."
India became the world's second-largest bovine exporter in 2012 and growth in shipments continued in 2013, rising 4% or 22,000 tonnes in the first half, Costello notes.
"Of particular importance is India's continued push of buffalo exports into markets such as Vietnam and Thailand presumably through grey channel for re-export to China."
However, New Zealand exports to China are forecast to remain strong as China will continue to face a supply deficit, creating strong demand for imports, says Costello.
Brazil will likely regain formal access to Chinese beef markets in early 2014, which will give China the opportunity to diversify its supply base. New Zealand currently accounts for 18 per cent of China's formal imports.

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