Beef prices breaking records

The run up in beef prices since May to record levels above $6.00 per kg is good news for beef producers (read more) and looking ahead demand and supply indicators suggest that the high prices will remain for the next few years. So what's behind these price gains and the positive outlook?

  • Drought in the US in recent times has resulted in the slaughter of a large portion of the US breeding herd, reduced progeny and herd rebuilding is currently limiting supply.
  • Current drought in some of Australia's strongest beef producing regions is having similar results with drought induced slaughter filling the current supply shortfall in US.
  • US beef production is heading for a 20 year low in 2015 and the US Department of Agriculture has said that it may not be until 2017 before US beef production is able to even start to expand again. In addition the slaughter of Australian breeding cows (at current record levels of 170,000 head a week) will severely restrict beef numbers in the coming years.
  • On the demand side ongoing growth in consumption in Asian markets is creating greater price competition for imported product.
There is an undercurrent of climate volatility driving  these supply and demand imbalances and while NZ is not insulated these challenges there are undoubtedly regions presenting lower risk and even the opportunity to make hay while the sun shines (literally).