LMC: Global Farmgate Beef Price Update

NORTHERN IRELAND, UK - One of the striking features of the beef trade in 2010 was the manner in which beef prices increased sharply in the large beef producing regions in the southern hemisphere over the course of the year.

3 November 2011

2 minute read

Europe

Ultimately this placed increased upward pressure on prices in Europe and contributed to the stronger trade which has been prevalent throughout 2011.

Given the impact of the South American trade in particular on the international scene, it is worth looking at how these prices have been performing in recent months.

Figure 1 clearly shows how NI prices have been more or less on a par with average EU R3 prices over the last two years. It also shows how corresponding prices in Brazil and Argentina increased steadily throughout 2010 and almost reached par with EU prices in the autumn of last year.

While Australian prices also increased, they did not rise to the same extent as those in South America.

Brazilian prices peaked at around 290c/kg last autumn but since then prices have gradually levelled off and eased back.

In the third week of October 2011, at 248c/kg Brazilian R3 steer prices were approximately 110c/kg lower than equivalent prices in the EU.

With the appreciation of the Brazilian Real against the euro in recent weeks, the gap between Brazilian and EU prices has narrowed since late September when the differential was 120c/kg.

Argentinean R3 steer (equivalent) prices have been stronger than Brazilian prices in recent weeks in euro terms.

Prices there currently stand at 281c/kg, 78c/kg lower than EU levels. Australian prices have lagged South American levels for much of the last two years and R3 steer prices there currently stand at 254c/kg. This is slightly higher than Brazilian levels but behind Argentinean prices.

Historically the gap between EU and Southern hemisphere prices has been much wider. Back in late 2008 Argentinean prices were 200c/kg lower than those in the EU, with Brazilian prices 150c/kg lower than EU levels.

While a gap has reopened over the course of the last year, the difference is nowhere near those levels. Producers will be keeping a close eye on those gaps in the knowledge that a trade deal between the EU and these South American Mercosur countries is something that remains possible before the end of 2011.