Global cattle price index stable
The Global Cattle Price Index was released in Rabobank's quarterly beef report. Rabobank expects the global beef market to trend higher for the remainder of the year and continue into 2014.
Lower feed costs and expectations for dry pastures to improve are promoting heifer retention, creating short supplies at processing facilities in the year ahead. Rabobank expects global beef demand and a rebound economy to support higher prices. Demand for beef products in Asian markets will keep exports from major cattle-producing countries strong even if local economies falter.
In a country-by-country analysis, Rabobank said dry conditions in northern Australia liquidated cattle herds leading to declining prices, however weather conditions are expected to improve restoring confidence in the industry.
The U.S. cattle industry was recently impacted by concerns regarding beta-agonist, which could affect exports. The cattle markets have been supported domestically by tightening supplies which could prompt a rally in the fourth quarter of 2013. Rabobank is forecasting fed cattle prices to reach $130 per cwt in the next three months and move even higher next year.
Canada has increased exports of feeder cattle and cull cows as more livestock are shipped across the border to the United States to avoid the high feed costs. The upcoming harvest is expected to reveal an above-average crop year leading to lowered feed costs next year.
Cattle prices in Brazil are improving with lower supplies and increased export demand. Brazil's export volumes in August were at their highest levels in over five years. Rabobank reports cattle prices in Brazil increased by 3 percent in the third quarter compared to the prior 3 months and were 12 percent above the same timeframe a year earlier.
European countries were impacted by the horsemeat scandal reducing consumer confidence and adding costs to source beef products.
As 2014 approaches, Rabobank says the beef industry may be affected by consumers refusing to pay for increasingly expensive beef, but a specific prices has not been determined. ■