According to the latest EU short-term outlook, 2019 is proving to be the reverse of 2018. For the first half of this year, beef exports are up and imports are down, as is production.

This reflects a weak beef price in the EU and serious options elsewhere, especially in Asia and particularly in China.

Beef

While slaughter numbers showed an increase in the first half of the year in the UK and Ireland, this was more than offset by a decline in the key continental beef-producing countries of France, the Netherlands and Belgium.

Slaughterings declined by 0.9% in the first half of the year and this is expected to be the overall decline for the entire year of 2019. The decline is forecast to continue for 2020 as well, with a prediction of a further 0.7% fall.

Exports

EU beef exports are predicted to increase by 8% in 2019, driven by weaker prices in the EU plus demand from Asian markets as a result of the shortage of pigmeat in China where the impact of African swine fever (ASF) is now being felt.

EU exports of beef have commenced to China, but the Philippines, Hong Kong, Israel and Bosnia have been growing markets for EU exports. For live exports, Turkey had cooled in the first half of this year compared with 2018 and this will be uncertain now with the conflict in Syria.

Imports

On imports, while Argentina and Namibia increased their sales to the EU in the first half of the year, overall imports are now forecast to decline by 3% in 2019 compared with last year.

As well as a weaker market in the EU, there has been a surge in South American exports to China, which has recently doubled the number of factories approved to export beef from Brazil and has also approved more factories from Argentina and Uruguay.

Pigmeat

Demand is soaring in China because the effects of the ASF outbreak are now being felt in the availability of pigmeat.

Slaughterings because of the disease and stocks have sustained the market until now, but with the pig herd down by one third and possibly by half in 2020, demand from China is expected to grow further in the latter part of 2019 and into 2020.

EU sales to China have increased by 45% this year to the end of July, but if the Chinese herd is reduced by half, the EU outlook predicts it would create a demand that is double the amount of pigmeat currently traded in the world.

Sheepmeat

Production of sheepmeat is forecast to grow 1% this year followed by a 1% decline in 2020.

Slaughterings in the UK was up 10% in the early part of 2019 in expectation of Brexit and EU prices were 10% to 15% lower this year, reaching a four-year low in July to September, with the weak value of sterling along with oversupply in the UK identified as the cause of a weaker market, according to the EU short-term outlook.

Imports were down 19% in the first half of the year and predicted to be down 165 overall for the year, with the demand from China making it a more attractive market for New Zealand than the EU.