What is the current state of affairs in the global market of beef? Why do beef prices vary considerable in different parts of the world? The beef futures seem to be depreciating while big scale investors are buying it heavily. will try to clarify the situation…
Crisis - Time For Higher Food Prices. Beef Is No Exception.
Beef prices have been bullish throughout 2012 and are expected to continue rallying due to:
· Unfavorable weather around the globe, which may cause a food crisis with much higher food prices.
· Seasonality (Higher demand for beef).
Droughts – Major Factor For Higher Food Prices
According to Eugene Olkhovsky, ’s leading expert, anomalous droughts in the USA and other countries around the globe will obviously result in poorer harvests, thus causing food price hikes.
The production of wheat in some countries is barely enough to meet the domestic needs. The import is under threat. Another problem is that fodder supplies are running low and there is nothing to replenish them with. Climatic changes together with a 25% decline in agricultural acres keep having a negative impact on the global agricultural sector.
The chart below, courtesy of , reflects the production of beef and veal in different countries over the last 3 years:
Judging by the given data, China and Pakistan have reduced their production of beef. Other countries seem to be increasing the production volume. However, this factor is unlikely to prevent the prices from growing in the near future.
Higher food prices seen over the last decade resulted in lower supply. Some countries simply cannot satisfy the demand. More experts say milk and meat products will inevitably become more expensive this year. Beef is no exception.
The chart below, courtesy of , shows beef prices around the globe:
The USDA expects the price of beef to increase by 4-5% due to higher prices on corns and other crops used as fodder. Asian markets, which depend on the import of corn, expect a major increase in milk and meat prices.
Forecasts And Prospects
Weather is not the only bullish factor. Higher personal income in countries with emerging economies and higher energy prices are 2 other factors indirectly influencing the global market of food. Moreover, the global economic instability won’t let food prices go down.
Masterforex-V academy, Lionstone Investment Services and other experts anticipate higher beef prices in all countries around the globe despite relatively stable production.
Some experts assume that higher beef price will result in poultry and pork becoming more popular among consumers.
Other major factors contributing to higher beef prices are:
· A stable decline in livestock population seen over the last few years
· Problems with fodder
· Stable exports
