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Demand, supply remain steady in beef forecast

 

 

 

By RACHEL LANE

D.C. Correspondent

 

WASHINGTON, D.C. — The global beef market forecast appears positive, according to the recent Q2 2014 Beef Quarterly. The report, released by the Rabobank Food & Agribusiness Research and Advisory (FAR) group, indicates the beef market remains fairly steady.

"The first real surprise was that Australia broke away from the TPP (Transpacific Partnership) negotiation group and went to strike a deal with Japan outside the other trade partners," said Don Close, a cattle economist with FAR. "In a sense, it left the U.S. and other trade pact countries in an awkward position because of Australia taking the quick deal.

"In a different light, the negotiations to push Japan to zero tariffs was at a standstill and the side agreement could actually have served as a stimulus to get the talks restarted."

Close said the Australia-Japan deal includes language that stipulates if any other country or the entire TPP strike a better deal, the Australia baseline tariffs will go to a new, lower level. Regardless of rumors, Close said he does not expect tariffs to reach zero.

While supply has increased from Australia and the United States, demand for beef products has increased in China and here. Demand for beef imports in China have grown 34 percent from January to April this year.

"Given the short supplies of lean beef and trimmings in the U.S., imports of Australian product to the states ... has been at record levels (for the year)," Close said.

When the rain finally arrives in Australia or herds have been reduced sufficiently to maintain operations, the Australian supplies of beef will tighten, he added.

The first-quarter report this year showed the United States with record-high beef prices. That has subsided slightly in the second-quarter report. There are signs U.S. farmers and ranchers plan to increase herd sizes, as there has been an increase in heifer retention.

Regardless of the continued drought conditions in some areas of the county, cow operations have stopped liquidating females. Prospects for the third quarter report appear positive, with strong prices in the forecast.

Rainfall, or the lack of it, is a wild card, said Sarah Kolell, director of public relations at FAR. Drought conditions in Australia, parts of the United States and Brazil can increase supply faster than demand.

Consumers also play a part in the demand for beef, as they must continue to pay the required prices, Kolell said. Current prices are fairly high for beef and some consumers may switch to pork and poultry, as a result.

7/23/2014