Global beef price surge looks set to gather pace
Beef buyers are holding their breath in anticipation of further strengthening in prices on international markets.
Prices in Irish plants are already up over 15 c/kg for R3 steers on this time last year. But this pales in comparison the rises that have been witnessed in some of the main beef producing regions in the rest of the world. Prices have increased by over 50pc in Brazil since November 2009, while prices are nearly 150pc higher in Argentina. In the US and Australia, returns have also increased by 25pc since last November, while prices in Uruguay have hardened by over 55pc.
The increase in Brazil has brought the prices that beef producers are receiving there in line with what Irish producers are receiving according to Bord Bia's beef specialist, Joe Burke. "The majority of Brazilian cattle would be equivalent to an O grade here," said Mr Burke. "The average price reported for Brazilian steers is currently 274c/kg deadweight. Irish O3 steers are currently averaging 267c/kg excluding VAT." Currency movements can significantly affect Brazilian beef prices. "A weaker dollar makes Brazilian beef prices more competitive in euro terms," he said.
However the increases within Europe are much more modest. UK prices are similar to 12 months ago, with some grades actually seeing a small decrease. France, Germany, Italy and Spain have all seen single digit percentage increases in prices. The recent halving of export-refund rates will also dampen returns to beef processers exporting outside the EU.
Traditionally lower-value markets are now competing for beef at prices similar to those within the EU, according to Mr Burke. "International markets like the Middle East and North Africa have strengthened and are importing a lot of product, the majority of which is South American," he said. Irish processors are also benefiting from the increased demand on international markets with exports to Russia rising significantly compared to last year.
While the wet weather of the last two weeks is bringing plenty of cattle into the beef factories at the moment, Mr Burke is predicting that supplies will tighten sooner rather than later. "We could see supplies ease in the next two weeks, which would of course be good news for Irish beef farmers," he said.