Analysis Beef
Beef market blows off some steam in December
For a moment it seemed that the trees were growing up to the sky in the beef market. A very tight supply combined with strong demand pushed the quotations to unprecedented heights. The new wave of corona infections and slowly completed Christmas supplies are bringing back the sense of reality.
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Two weeks ago, beef slaughterhouse Ameco know that the top of the market had been reached and that there may be some price pressure towards the new year. This prediction appears to have come true, because the quotations for (particularly female) slaughter and sausage cows have taken a step back, although part of the loss has already been recovered. This is no different in the German market, which is important to the Netherlands.
Correction to records
Yet the underlying market is anything but bad. The current corrections can be seen as a relatively small step back from recent record levels. The supply of cows for slaughter remains on the tight side and this is not expected to change much in the short term. In addition, beef remains in high demand internationally.
The US Department of Agriculture (USDA) again showed strong export figures in October. United States exporters exported 7,5% more beef than in the same month last year. The volume amounted to 115.000 tons. The value of this stream grew even faster, a sign of the high prices paid for beef. The export volume was worth more than $950 million, which is 48% more than the previous year. Main markets remain South Korea, Japan and China. The United States is benefiting greatly from trade agreements with the Chinese: volume increased by 150%.
The United States is the second largest exporter worldwide. While the country expects a slight contraction in its own production next year. That does not increase the amount of available product. The Chinese ban on Brazilian beef undoubtedly also plays a role in this. Brazil, the number one, diagnosed BSE in two cows in September. China therefore imposed a (temporary) import ban. Although this ban was expected to be temporary, the flow of exports is still at a standstill. Brazilian exporters recently announced that they have seen total export volumes fall by 47%.
Although international feuds cause shifts in export flows, and this can have a significant impact on national markets, it does not change the factors in the market. There is a tight supply of beef worldwide. It is therefore expected that prices will remain at a high level, despite the current corrections.