Ian Kennedy, Consumer and Market Insight, Bord Bia

The latest Rabobank beef report for 2016 shows a large increase in beef exports from South America. Exports of beef from South America are expected to increase by 11%. Currency values, an increase in availability of beef and improvement in access to import countries are all significant factors Rabobank has highlighted leading to the rise. Of course this has knock-on effects for local South American consumers with increases in exports and a decrease in local consumption expected.

In Brazil, with the expected decline in consumption, the local consumers also face a decline in purchasing power with local beef prices remaining high due to the potentially drastic high inflation rate Brazil currently has. Local cattle producers have been instructed to maintain their cows, rather than send them to slaughter, leading to continuing high prices as a result of low calf availability. The re-opening of the Chinese market has also had a significant impact with expected Chinese exports to double in 2016. A weak currency has also made Brazilian exports very competitive in global markets, this global demand has pushed local prices higher as a result. Due to high domestic prices, local consumers have edged towards cheaper proteins like poultry and beef export gains have excelled.

Looking closer to home, the EU beef market is expected to remain relatively slow for the next few months. Export growth is forecasted to be slow and at lower value due to the increase in competition from other exporters in the primary markets of Africa and the Middle East. Countries that are expanding significantly in dairy are set to experience notable pressure due to the anticipated increase in cow throughput on the back of current pressure in the dairy market.

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