Global beef prices have been higher this year than last, reaching their peak of nearly $5,500/tonne in July but have since retreated, based on volumes and export prices of the world’s three biggest exporters, the US, Australia and Brazil. All three of these countries are expanding production and are each actively looking to grow their global market share. Price rises this year have been set against a background of rising global beef supply, with growing global demand serving to underpin these ambitions. However, demand will need to continue to keep pace with supply if prices are to remain buoyed. This year import demand has been strong from traditionally important markets such as China and Japan, but also in growing markets like Indonesia and the Philippines. The UK was granted access to the Philippines this summer.
Brazil’s meat industry has been beset by widely reported problems earlier in the year, and recently a Russian ban on its beef, following the reported discovery of the banned growth stimulant ractopamine. These combined have brought additional challenges for Brazil. However, of the three countries mentioned above, only Australia exports a significant amount of beef in comparison to its own domestic production (around 70% in 2016). The US and Brazil export relatively less (10% and 18% respectively). Therefore, US and Brazilian exports are more sensitive to domestic demand, compared to Australia. The economic outlook for Brazil looks quite positive, which could therefore lead to domestic demand competing with supplies available for export next year. However, in the short term, it would appear that global supply growth may be outstripping the rise in global demand. This has contributed to the recent slowdown in the rate at which export prices have been rising.