Rabobank expects consolidation in beef industry
Tight cattle supplies carrying prices higher globally: Finished cattle availability is still tight throughout the world, due to cattle herd rebuilding in many producing countries after years of cow liquidation and sustained unprofitability in grain-fed markets.
Beef trade shaken by tsunami and earthquake in Japan: Natural disasters adversely affected Japanese beef market, drastically reducing local production due to livestock losses and disruption to markets; however, demand was less severely impacted than production.
U.S.to become net beef exporter as exports boom and imports tighten on weaker U.S. dollar: The U.S. became a net exporter of beef this year due to a lower U.S. dollar, robust global demand driven by supply challenges in Japan and Korea, and contracting imports.
Softening demand in the EU and U.S. a concern: Concerns are renewed among Euro regions regarding fiscal difficulties in Greece, and the resultant dampening consumer confidence; meanwhile, higher gas prices and reduced growth are hampering U.S. demand prospects, as well as an increase in unemployment and fears of a double dip in the U.S. housing market.
Macro policy tightening slowing demand growth in emerging markets: Authorities in both Brazil and China have actively intervened to slow their overheating economies and dampen the impending threat of inflation.
Beef processing consolidation expected to ramp up: The decline in global beef cattle inventories vs. processing capacity will likely lead to a renewed wave of industry consolidation and rationalization in primary beef processing.
Source: Rabobank
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