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Supply-heavy protein markets pressure beef prices in 2017

Thinkstock images Meat cases full of beef, pork and chicken face consumers
Huge supplies of pork and chicken will pressure growing supplies of beef through 2017, according to Rabobank analysts.
Strong dollar makes exports less attractive and imports more attractive and global production of pork and chicken is massive.

Rabobank continues to warn beef producers they may struggle in supply-rich protein markets in 2017.

The Rabobank Food & Agribusiness Research and Advisory group recently put out a global meats outlook called “Prices Under Pressure in a Supply-Driven Market."

Rabobank analysts say after posting herd growth of 4.5-5% in 2016, they expect US beef producers to add 2.5-3% more animals to the national herd in 2017. They also expect continued strength in the US dollar to draw more beef imports into the US in 2017.

On the positive side, the analysts suggested higher beef and meat supplies should decrease volatility in the markets, which should in turn reduce some of the price swings beef producers have experienced in recent years.

Australia has begun herd rebuilding after a severe drought, and so Australian beef production will drop. The analysts say Brazilian beef production will rebound more in 2017 after a small increase in 2016. New Zealand beef production is expected to stay flat.

The surge in the US dollar's value will pressure meat prices in the US because the growing volume of meat needs export volume to boost overall consumption and reduce domestic supply.

The analysts also say global pork production is the big protein market driver next year, including a big increase in Chinese domestic pork production. Global beef production will expand overall. Global poultry production is likely to shrink somewhat in 2017 after three years of expansion, but the US expansion is expected to continue.

Otherwise, Rabobank predicts an increasingly complex protein market, with consumers having more choice and therefore potentially more power to exert their wishes in the marketplace. Rabobank analysts suggest such complexity could create opportunities for the producers or processors can meet those demands.

TAGS: Beef
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