Robust demand drowns out trade war worries for US beef

Robust demand drowns out trade war worries for US beef


Beef Cattle
BEEF ECONOMICS: US expert David E Williams, director of global protein with agribusiness intelligence company Informa Economics and his Sydney-based colleague Patrick Maguire at BeefEx in Brisbane today. Photo: Ruth Schwager.

BEEF ECONOMICS: US expert David E Williams, director of global protein with agribusiness intelligence company Informa Economics and his Sydney-based colleague Patrick Maguire at BeefEx in Brisbane today. Photo: Ruth Schwager.

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US beef expert tells Australia to adapt: grinding beef is out

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ROBUST global demand for beef and the fact it remains king among the increasingly wealthier middle classes appears to have drowned out the worries of trade war backlash for United States cattle producers.

Texas-based protein economist David E Williams, from the world’s largest agribusiness intelligence company Informa Economics, was one of the superstar acts at the big industry event BeefEx 2018, run by the Australian Lot Feeders Association and held at Brisbane Showgrounds this week.

Mr Williams spoke about the ‘tremendous amounts of beef demand’ coming from both within the US and from key export markets for both his country and Australia.

Despite what he called the “US proteins arms race”, whereby pork production will this year expand by more than 3 per cent, chicken by close to 4pc and beef by 1pc, consumption would “eclipse what was achieved in 2004 when the Atkins diet scaled up protein eating in a way that changed the world.”

“The US is producing pounds of protein at record large amounts,” Mr Williams said.

“But global beef demand is over 1.5 standard deviations higher than where we were this time last year.

“Why is that happening? All economies are in growth mode and as the middle classes grow, in whatever country, they eat more beef.”

It’s a particularly rosy scenario for Australia and the US, who can offer supply chains that come with a solid food safety reputation, he believes.

But a word of advice to Australian beef: Be prepared to adapt.

The traditional low-price frozen grinding beef Australia has sent to the US in large volumes is on the way out.

It has lost its lustre, said Mr Williams.

Fundamentally demand had changed and that would likely be a long-term trend, he said.

“It has been in the news that big businesses, like McDonald’s quarter pounders, are going to fresh grounded beef,” Mr Williams said.

Beef supply chains in the US were putting things in line to supply those changing quick service restaurant demands and the result is less need for imported Australian manufacturing product.

“Even the ones that haven’t gone 100 per cent fresh are rationing their mixture, bringing back to just 20pc the amount of Australian imported meat used,” he said.

The chilled market was likely where Australia’s opportunities in the US now lay.

“There is big demand for what you produce in Australia, be it antibiotic-free or other higher quality segmentation.

“The US and global consumer is getting more sophisticated by the moment.

“Don’t just hope that grinding market comes back - I don’t think you will ever return to those high tonnages again - but adapt.”

In the US, the rate of herd expansion had slowed considerably but beef output was still expected to grow modestly next year and the year after, Mr Williams reported.

Fed-beef production is expected to be the largest since 2002, with further - but more moderate - increases next year.

Cow beef production will be the largest since 2011.

“If we continue to see this type of demand from the global beef industry, I see nothing that would curtail production. I think we’ll see it continue to expand in the US,” he said.

The US was largely “through the drought rough spot” now and weather forecasts were for more moisture this winter and in spring.

The larger exports coming out of the US reflected the increased production, lower prices and smaller output from key competitors.

“We’re seeing so much demand for US beef out of Korea at the moment that we can’t keep up the supply,” Mr Williams said.

“Now we have the new US Mexico Canada agreement, just signed last week, and there is much more demand for US beef in Mexico than ever.

It was these two countries, and Asia, where the US saw its beef export potential.

Still, Mr Williams acknowledged, it was uncertain times to some degree.

“We’re in middle of a trade war. Our president is going after trade issues aggressively and the first thing all these countries come back at us with is the ag sector,” he said.

The story Robust demand drowns out trade war worries for US beef first appeared on Farm Online.

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