Beef Quarterly Q4 2017: Export Pressure Starting to Mount
2018 will be another year of expansion for the global beef industry—and as production volumes outpace domestic consumption, exports become more critical. An estimated additional 1.3m tonnes will be produced in 2018 across the major producing areas, including the US and Brazil.
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EU trade agreements
The EU-Canada Comprehensive Economic and Trade Agreement (CETA) provisionally came into force in Q3. CETA grants Canada duty-free access to the EU for 45,838 tonnes of beef. It will also retain access to the high quality 11,500-tonne Hilton Quota shared with the US, but its in-quota duty will be reduced to zero. Canada exported a total 443,000 tonnes in 2016, but just 350 tonnes to the EU.
The ongoing trade agreement discussions between the EU and Mercosur risk missing the year-end deadline, given disagreements on beef access to Europe. Watch for additional beef imports placing downward pressure on local beef prices.
Russian ban on Brazilian beef
On 20 November, Russia announced it would place temporary bans on pork and beef imports from Brazil commencing 1 December, following the reported presence of ractopamine in some shipments. While the ban has occurred at the low point of the season it is unclear how long it may be in place. Russia accounts for 11% of Brazilian beef exports. Watch for the possibility that this significant volume of beef could need to find another export destination.
Indonesia loses appeal in WTO
The WTO released the appellate body’s report in late November, rejecting Indonesia’s defence in two cases, brought by New Zealand (DS477) and the US (DS478), concerning measures imposed by Indonesia on imports of horticultural products, animals, and animal products. As a result, this may lead to an increase in cheaper beef imports—particularly secondary cuts—placing pressure on local feedlots. Indonesia’s negotiators are expected to push for a quota system for both chicken and beef products, which could soften the blow to the country’s farmers—but watch for attrition and consolidation among Indonesia’s broiler farms and feedlotters.
Angus Gidley-BairdSenior Analyst - Animal Protein Read more
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