The US looks unlikely to reopen imminently to Brazilian fresh beef exports, Rabobank said – boding well for shipments from rival origins, and prospects for Australian cattle prices to remain close to record highs.
“Authorities” in Brazil believe the country will win renewed access to the US for its fresh beef exports “in the first half of the year”, Rabobank said.
However, “US sources believe that access will not be granted until the second half of the year,” a delay which would give extra scope for Australian shipments to what has been its biggest market since 2014.
Australia’s beef industry is particularly sensitive to the return of Brazilian supplies, which were banned 16 years ago over an outbreak of foot-and-mouth disease, because of the parity of the meat from the two export origins.
Abares, Australia’s official commodities bureau, noted in a report last month that “Australia’s primary beef export to the US market is grass-fed lean manufacturing beef, which is comparable with the majority of beef produced in Brazil”.
A revival in Brazilian shipments, over which Brasilia and Washington officials have been in talks for six years, “would lead to increased competition with Australian beef in the US market”.
‘Degree of optimism’
Rabobank’s comments follow a slower start to the year for Australian beef exports, with combined volumes in January and February, at a little over 149,000 tonnes, well below the near-170,000 tonnes in shipments in the first two months of 2015.
Shipments to the US last month were, at more than 26,000 tonnes, up 57% month on month, but well below the 38,000 tonnes reached in February last year, according to official Australian statistics.
The declines reflect in part the reduced availability of Australian beef, after a period of enhanced slaughter – which was fuelled by elevated prices of the meat, and drought, which encouraged a reduction in the Australian herd to a 20-year low as of the end of last year.
However, slaughter rates have been depressed too by a growing willingness among producers to restock, a trend reflected in a particular drop, of 26% year on year in January, of cow slaughter.
“With promising rainfalls across the major-cattle producing areas, there is a degree of optimism among producers that is reflected in increased restocker activity,” Rabobank said.
‘Prices to stay strong’
The prospect of extended competition between producers and beef exporters and producers for animals bodes well for cattle prices, which remain close to the record 605.75 Australian dollar cents per kilogramme reached in mid-February.
The index stood at 584.5 Australian dollar cents on Wednesday, according to Meat and Livestock Australia.
Indeed, National Australia Bank on Wednesday said that “beef producers will continue to see close to record-high prices well into 2016-17”, foreseeing a drop of only 1.7% over the season, after a 45% rally expected for 2015-16.
The forecast assumes continued “strong restocking activity”, and a fall ahead in the Australian dollar below $0.70 per Aus$1.
(Source – http://www.agrimoney.com/news/us-wont-reopen-imminently-to-brazil-beef-says-rabobank–9451.html)