High beef prices are likely to damage international consumer demand, according to a report by analyst Rabobank.
Although global cattle prices were falling, led by declines in key exporting countries Brazil and Australia, consumers were becoming increasingly reluctant to pay high prices for beef.
In May, the global cattle price index was 6% lower than the first quarter of the year, partly due to a strengthening US dollar, said analyst Albert Vernooij. “But the broader picture still points to tempered consumer appetite as increases in disposable income worldwide appear to be slowing and threats of inflation continue across the globe. The relative value proposition for beef has diminished as beef prices have risen relative to chicken and pork.”
Rabobank expected global beef supplies to remain near 2012 levels, with a bias towards a minor increase driven by the southern hemisphere.
However, prices in the EU were bucking the trend, as tight supplies have combined with strong demand following the horsemeat scandal. “Prices are expected to remain elevated for the remainder of 2013, but the strong increase experienced since February is expected to level off over the summer.”