Beef Quarterly Q3 2020: New Forces Shaping Future UK Beef Imports
Once outside the European bloc, the UK is expected to become the fifth or sixth largest beef-importing country. Consumer acceptance and non-tariff barriers will play significant roles in determining which countries ultimately supply the UK beef market in the future.
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Brexit trade talks between the UK and EU continue to progress. “While pure economic reasoning and geopolitics normally play strong roles in trade negotiations, we believe that, in the case of the UK, consumer acceptance and non-tariff barriers will be equally significant in determining which countries ultimately supply the UK beef market in the future,” according to Angus Gidley-Baird, Senior Analyst – Animal Protein.
Covid-19 continues to play out in the global beef market. Here there is a brief summary:
Australia – A second wave of infections in Victoria has resulted in restrictions being put in place for meat processing facilities in that state. Lower livestock availability leads us to believe the disruptions to beef slaughter volumes will be minimal.
Brazil – Some regions are experiencing second waves, while others are still in their first wave. Still, the number of new cases and fatalities in July remained stable, with reductions in some regions. The foodservice sector has resumed business in some states, but with reduced capacity.
Canada – Following a drastic reduction in slaughter rates during April and May due to Covid-19 outbreaks at plants, weekly slaughter rates have recovered. Although a fed cattle backlog still remains, there will be ample opportunity to clear the backlog in Q3.
China – Covid-19 is largely under control, but local government actions to control the spread of new cases are slowing the recovery of foodservice. Given suspected connections between new Covid-19 cases and packaging of imported seafood and other animal proteins, imports and cold storage are under surveillance, leading to delays and uncertainties with imports.
Europe – Foodservice across Europe has resumed operations, although with restrictions, and as a result, demand for beef has not fully recovered. Covid-19 cases are increasing again in some countries, but are being managed regionally, rather than complete lockdown of countries.
NZ – Processing capacity returned to normal levels in May, although the disruptions created during Level 4 restrictions in late March/April did create a backlog of cattle to be killed through June and July in some parts of the country that has only just now been worked through.
US – Weekly fed slaughter capacity has recovered to 97% to 98% of pre-Covid-19 levels, and as a result, comprehensive cutout prices have returned to more normal levels. US foodservice continued to show signs of recovery through July and August.
Rabobank Seven-Nation Cattle Price Index – Cattle prices around the world showed signs of recovery from May through July. Cattle prices (in USD) in most major exporting countries increased, while the US saw cattle prices decline, resulting in an overall lift in the index.
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Angus Gidley-BairdSenior Analyst - Animal Protein Read more