What price beef in 2012?

BEEF markets, on a global basis, will strengthen in 2012 predicts Rabobank in its quarterly outlook review.

There will be record high prices in some regions – but this will bring implications for large scale finishers and processors, who will also have to contend with the impact of tightening supplies on capacity utilisation.

The bank suggests the industry could, for various reasons, see more mergers and acquisitions – the initial signs of which were seen in the last quarter of 2011 in both Europe and the States. It cites, for example, Dawn’s acquisition of Duerden’s beef abattoir in Ulverston, Cumbria; ABP’s acquisition of RWM Food Group and the takeover of an insolvent meat company in sourthern Germany by the big German operator Tonnies.

The Rabobank report also says beef processors’ ability to recover higher costs from the retail sector will be tested because of the economic slowdown in some of the largest consumer markets like Europe and the US.

“We have not identified it yet, but there is a limit to what consumers will pay for retail beef.”

It singles out Brazil as one of the top beef producing countries for which the outlook does look particularly positive as it is the only one Rabobank expects to have a combination of increased supply, robust domestic demand and a growth in exports.

But cheap red meat won’t be coming here. Quality Meat Scotland having conducted its own analysis of global meat trends suggests the threat of imports undercutting our market is reducing.

The reason is the prevailing economic climate.

QMS says increasing world demand and currency fluctuations outside Europe, mean imports from areas such as South America and Australasia are losing their competitive edge on the price front.

Head of economics services Stuart Ashworth said: “With the population of the UK expected to grow by 8 per cent by 2020, we’re going to be looking at a rise in demand for meat within the UK. When we take into account our growing export activity this means we will be selling into, and buying from, an increasingly tightly supplied global market.”

More details in your Farmers Guardian on Friday (Januray 27th)

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