Brazil and India threaten the stability of global beef market
Rabobank's recent report points out to three major events that could cause the shift in today's global beef industry: China finally allowing US beef imports for the first time in nearly 14 years, political upheaval in Brazil, and the recently announced ban on cattle and buffalo slaughter in India.
In addition, Blake Holgate, Rabobank Analyst Animal Protein, added that “while US exports continue to perform strongly (and have now reached record levels), reduced supply from Australia and New Zealand, along with potential shocks from Brazil and India, could see the balance in the beef market shift back to a supply-limited market.”
After nearly 14 years China lifted the ban on American beef imports, thus the US exported the first shipment of beef to China on 14 June. Analysts from Rabobank expect the initial trade volumes to be small, but since China is the world's largest importer, the Sino - US deal should lead to a major trade channel in time.
On the other hand, in Brazil two political events have disrupted the local meat sector this year. The meat scandal triggered in March resulted in Brazil's importing countries placing temporary restrictions on Brazilian meat imports. Another political scandal erupted in May concerning Brazil's largest beef processor, which determined a drop in Brazilian beef export by around 10% YOY in the first five months of 2017. The Rabobank report also adds that these disruptions caused an opening space in the global beef market and that the recent drop in cattle prices could lead to a future reduction in production.
Another important event that could reshape the global beef trade that the Rabobank report refers to is the directive issued by the Indian federal government to ban the sale of cattle, including buffalo, in notified livestock markets for non-agricultural purposes, including the sale of cattle for slaughter. Rabobank analysts say that since India is one of the largest global bovine exporters, the ban on slaughter could have an enormous global impact. The report also states that the number of countries that could be affected by this ban is currently unknown as there was no further information available regarding how many states would conform to the federal government directive, and when.
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