The ongoing absence of clarity in relation to the timing, shape and nature of Brexit continues to cause uncertainty across the EU beef sector. Meanwhile, the prospects for the global beef market remain positive, with growing demand in key import regions along with tighter beef supplies among some key global exporters combining to boost prices.

Across Europe, the beef market continues to feel the effects of the uncertainty generated by Brexit combined with the effects of a build-up of beef stocks in late 2018 reflecting higher output, increased imports and reduced EU exports. This year output across the EU is expected to decline by almost 2%, reflecting reduced output in the UK and some Continental producers. While consumption may ease somewhat as a result of lower availability, the main influence on price developments will be the final outcome in relation to Brexit. In the event of an orderly Brexit, the prospects for the EU market point to a more stable supply/demand situation, which would help Irish cattle prices, particularly as finished cattle supplies here tighten over the coming months.

On the global front, 2019 is expected to see a slowdown in beef production growth as a drop of 5% in Australian output due to drought conditions combined with lower production in Uruguay and Canada help to partly offset growth in Brazil and Argentina and to a lesser extent the US.

Global demand for beef

Consumer demand for beef, particularly in emerging regions, remains positive, with forecasts suggesting more than 55% of consumption growth will occur in Asia and the Middle East/north Africa where population growth and rising disposable incomes are driving demand.

China

China continues to increasingly affect the global beef market, with GIRA analysis suggesting the market has accounted for half of the global growth in beef expenditure over the last decade. The recent lack of growth in domestic supplies combined with an increase in beef demand – as consumption shifts away somewhat from pork – is boosting beef demand and resulting in retail beef prices reaching record levels. Industry forecasts suggest growth of around 20% in total beef imports in 2019.

Import demand in other Asian markets identified by Bord Bia in our Market Prioritisation programme such as Japan, South Korea, Malaysia and Vietnam are expected to remain firm, with import demand in Asian markets other than China set to rise by 3% to over 3m tonnes. The introduction of new trade agreements such as the Japan-EU Economic Partnership Agreement and the corresponding reduction in import tariffs presents an opportunity to grow volumes of European and Irish beef in the region.

Other major trends expected in 2019 include a recovery in import demand in Russia, with volumes expected to rise by 28% to 470,000t, reflecting renewed Brazilian access to the market, which will help absorb product that would have gone elsewhere.

Beef exporting countries

Among the major global beef exporters, 2019 is expected to see growth of 8% in Brazilian beef exports, with almost half destined for China and a further third going to Middle East/north Africa. The recovery in Argentinian exports is set to accelerate further, with an increase of a third anticipated to 600,000t. Following a decline in 2018, Indian export volumes look set to recover while US beef exports seem set to increase further. Drought has affected Australian production and exports are expected to fall by around 5% in 2019.

Outlook

The supply and demand dynamics anticipated for 2019 suggest a broadly positive outlook for global beef prices. Various forecasts across different markets suggest stable to higher cattle prices are likely throughout the year. Price trends for March 2019 compared to same month last year point to higher cattle prices in euro terms in most regions with the exception of Brazil, where prices started the year slowly but have increased over recent weeks, and the EU.