Analysis Beef
'Corona peak can abolish beef price peak'
Although little has changed in the heated beef market in recent weeks, there are reports from several quarters that the deteriorating situation surrounding the corona virus could disrupt the market. Stories come from, among others, Germany, but commercial director Clemens Roelofs of one of the largest cattle slaughterers in the Netherlands, Ameco from Apeldoorn, also sees this.
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Beef prices have been at high levels for months. The lagging production - both worldwide and at European level - still leads to very strong price formation. In addition, the Ministry of Agriculture in Australia, one of the world's largest exporters, recently lowered production expectations. In the United Kingdom, a 4% lower beef production was also reported last week. It contributes to the underlying, strong sentiment.
Limited supply of cattle for slaughter
Closer to home, Roelofs speaks of a tight supply of cattle and therefore also of beef. The supply of cows for slaughter and rosés is limited. In Germany, the supply of live cattle is also not large, which leads to competition on the Dutch market: "In Germany, prices for livestock farmers are still somewhat higher than here," Roelofs reports. This makes it a challenge for slaughterhouses to get the hooks properly filled. The Irish have a lot of difficulty (due to a lack of personnel) in processing enough product. Moreover, the supply of meat from South America is small.
The tense situation regarding the supply of live cattle is currently becoming increasingly out of step with the sales opportunities. Recently, concerns about the increasing number of corona infections and the possibility of possible 'lockdown-like' measures have increased rapidly.
The first lockdown is fresh in our minds
The meat trade was very smooth in the past period, especially with a focus on supplies for the holidays. Since last week, however, there has been more and more talk of a quieter question. The uncertainty surrounding the deteriorating corona situation and the consequences for the catering sector is increasing. The size of orders is decreasing to prevent stock from building up that cannot be used.
Roelofs currently assumes that demand for the holidays can keep the market stable until Christmas, but predicts a more difficult situation will arise before the beginning of January: "The tight supply is pushing prices for live cattle to great heights, but margins may be squeezed at the start." of the new year if some of the demand for beef disappears."
Although the beef market is still running at high levels, there is currently no euphoria. There is too much uncertainty about the consequences of any new measures in the fight against the coronavirus.