Expanding meat production to increase competition in 2018

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Meat production is forecast to expand globally in 2018, intensifying trade competition in international markets and between different types of animal proteins, according to a newly-released international report.

Rabobank’s Global Animal Protein Outlook for 2018 forecasts production increases in all major regions of the world – with total growth once again surpassing the 10-year average. In Australia, however, meat production is forecast to increase only slightly, as the country’s beef herd and sheep flock rebuild from recent years’ lows.

The report states Brazil, China and the United States will be the main drivers of global meat production growth in 2018. Beef will join pork as a strong contributor to global expansion of animal protein production, with poultry production also expected to grow, although the rate will be slightly down on 2017. Aquaculture will continue to drive seafood supply growth around the world.

“Rabobank expects trade to represent an important area of both uncertainty and opportunity for the global animal proteins sector over the coming year,” said Rabobank’s Australian-based senior animal proteins analyst Angus Gidley- Baird.

“Trade will be the top-of-mind issue for global animal protein as we head into a new year, and enhancing competitiveness is going to be critical for success.”

For Australia, the report says, with a return to more favourable seasonal conditions, beef production in 2018 is expected to see its first year-on-year increase since the high cattle slaughter in 2014, which occurred during prolonged drought in much of Queensland and northern New South Wales.

Mr Gidley-Baird said a forecast 3 per cent growth in beef production in Australia in 2018 would bring total production levels back to near the longer-term average of about 2.1 million tonnes carcass weight.

The report says Australia’s cattle slaughter numbers are expected to be slightly below the long-term average in 2018. “This reflects a lower cattle inventory of 27.5 million head, as well as heavier average carcass weights (at close to 300 kilograms), following improved seasonal conditions and increased numbers of cattle on feed,” Mr Gidley-Baird said.

For Australian beef prices, the report says, the large volume of beef in the global market will exert downward pressure, but this will be countered by limited supplies of young cattle for rebuilding.

“Prices have declined from their record highs of late 2016 – and notwithstanding a sudden deterioration in the season – prices are expected to ease slightly from current levels as cattle numbers increase,” Mr Gidley-Baird said.

The report forecasts Australian lamb production in 2018 to remain at similar levels to 2017. Overall sheep meat production is expected to increase marginally.

Mr Gidley-Baird said mutton production was forecast to increase following a period of low sheep slaughter as producers held on to ewes.

“2017 has seen lower slaughter numbers given the reduced flock we’ve had here and the improved seasonal conditions,” he said, “while improved wool prices have also been supporting retention.”

Rabobank forecasts lamb and sheep prices to remain at strong levels through 2018. However, the report notes, prices will be challenged domestically by falls in the price of other proteins. Demand from export markets is expected to remain solid, given lower New Zealand production, Mr Gidley-Baird said.