Beef supported by strong demand globally
Strong demand and limited supply of livestock caused livestock prices to rise in most livestock-producing countries. Prices in Australia and Brazil, in particular, are currently trading 36% and 23% higher, respectively, than a year ago, announce Rabobank in its latest quarterly report. Also, China still represents a good market for beef exporters, as prices have remained elevated for the first two months of this year, declared Angus Gidley-Baird, Senior Analyst - Animal Protein, Rabobank.
Meantime, the EU block is expected to report a decline in beef production, at least in a short time and the consumption levels are dependent on the recovery of the foodservice sector. "Foodservice operations remain restricted in most parts of the world, and this is unlikely to change in 1H 2021. This means beef consumption depends on how successfully the industry can market beef for at-home consumption, with China and the US leading this trend. Foodservice is expected to start recovering in 2H 2021, and the re-opening of these channels could support increased consumption, depending on price", commented Mr. Gidley-Baird.
Brexit is also seen as a barrier for trade, at least for now when customs checks and new administrative procedures have contributed to friction in trade flows, which will likely persist in the coming months. "Issues are currently more pronounced concerning trade flows from the UK to the EU as the UK will only introduce its customs checks and regulations in 2H 2021. Some uncertainty remains as to how exactly the new UK regulations will impact the trade of beef products from the EU," predicts the analyst. Nevertheless, the UK may soon open other markets in the Asia-Pacific region if the Kingdom's request to be allowed to join the CPTPP will be solved soon. For the moment, the global beef industry is waiting for new investors and innovation to adapt the sector to the new environmental policies. "We believe that research and innovation in the beef industry will continue to evolve but we are currently enabled by two main catalysts that will stimulate this further. Firstly, new investors in the space and secondly, the sustainability drive that not only seeks production improvements but also creates wider community interest in driving improvements," Mr. Gidley-Baird added.
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