Strong dollar hitting beef exports

According to Rabobank’s quarterly update on the global beef market, covering Q3, imports of beef to the US from Australia and New Zealand are set to reach their quota limits in Q4 of 418,000 tonnes (t) and 213,402t, respectively, before the end of the year. Once the quota is reached, a 21% to 26% discretionary tariff can be applied. This is likely to result in some short-term softening of beef pricing in the Australian and New Zealand markets, especially given the availability of supply to the US, the report stated. “Australia and New Zealand are now confronted with the question of whether they should continue to ship at high volumes and pay the tariff, look for alternative markets or slow down production,” the report added. “There are opportunities to send product to alternative markets such as China, Japan and South Korea. However, demand is not expected to be strong enough for them to match prices to the US, particularly to fill a short-term order.” Demand Within the US, despite high cattle and beef prices, consumers continue to purchase beef, fuelling demand for domestic and imported supplies. The strong US currency is affecting US exports, pushing normally exported short plate and brisket cuts back into the domestic market. Other currency fluctuations, including the depreciation of the Chinese yuan and Brazilian real, are also having an impact on the global beef trade. The weakening Chinese economy and devaluation of the yuan are curbing beef prices in China. In Brazil, the devaluation of the real is expected to support Brazilian beef exports in the coming months. “With little change expected in major beef-trading economies in the coming quarter, other than a possibility of the US raising interest rates, a strong US currency is expected to continue to affect global beef trade,” said Angus Gidley-Baird, senior animal protein analyst at Rabobank. Perform robustly The EU beef market continued to perform robustly during the summer, due to developing domestic and export demand. Domestically, the improving economic situation supported beef demand. On the export market, the strong drop in exports to Russia was more than compensated for by higher volumes to all other markets resulting in an increase of more than 15,000t (up 5.8% January to June year-on-year. The most notable rises were to Turkey (up 17,400t, a 1,242% increase), Lebanon (up 7,400t, a 39.8% increase) and Ivory Coast (up 3,100t, a 23.2% increase) for the period January to June year-on-year. There has been little progress in trade developments in the quarter. Australia is still awaiting parliamentary processes to enact the China free trade agreement (FTA), Brazil is still progressing towards a trade protocol with the US, and the Trans Pacific Partnership (TTP) remains in negotiation. Russia’s decision to extend its ban on agricultural products from the EU, the US, Canada, Norway and Australia by another year is also a significant influence on global trade, the report noted.

Strong dollar hitting beef exports

The strong US dollar is having an impact on its beef trade, with high levels of imports from cheaper global markets and a 10% year-on-year to July reduction in its beef exports.

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