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Cattle Prices Should Recover Again

Despite controversies surrounding beef safety, prices will rebound.

A new report from Rabobank's global Food & Agribusiness Research and Advisory department looks at the global beef industry, examining current trends in pricing, import and export markets, supply and demand, and the impact of both the lean fine textured beef (LFTB) controversy in the U.S. and Schmallenberg virus in the EU.

In the report, Rabobank's global team of animal protein analysts says there are downside price risks in beef cattle markets. Rabobank expects a slightly larger global supply, led by Brazil and other countries in the Southern Hemisphere, amidst a global economy which remains relatively weak.

For the rest of the year, however, cattle prices should recover again as markets shift from the short-term supply bulge (primarily Brazil) to materially lower supplies, as the majority of the beef-producing countries go through liquidation, a retention cycle, or weather-related problems.

Nevertheless, a significant rise in prices may be limited by weakness in economic growth, which may prompt shifts toward cheaper sources of protein, notably in the developing world.

Longer term, Rabobank's view is that global meat protein, and especially beef supplies, will continue to lag income and population growth in important emerging markets. This will support prices while raising volume and cost risks to processors, and price risks to buyers.

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