Rabobank is predicting continued strength in cattle markets globally this year, with the potential for "double-digit" gains again.
There were limited downside price risks for the first quarter as the bank expected a slightly larger global supply amid a backdrop of slowing winter demand in the northern hemisphere, its latest quarterly beef report said.
For the rest of the year, cattle prices should post record highs as markets moved from the short-term supply bulge (primarily in the United States and Brazil) to materially lower supplies.
In the longer term, Rabobank believed global meat protein supplies would continue to lag income and population growth in important emerging markets, raising volume risks to processors and price risks to everyone from feeder cattle buyers to consumers.
In New Zealand, cattle prices lifted on average 33c/kg cwt quarter-on-quarter in the fourth quarter of 2011, boosted by the lack of stock for processing during that quarter caused by higher than usual cow slaughter at the beginning of the year as a result of an early dry summer in 2010-11.
Additionally, dairy farmers were encouraged to hold stock for production through the coming summer, spurred by high feed availability and solid milk prices.
Cow slaughter in the fourth-quarter was 20% lower than in the corresponding period of the previous year. Prices were also influenced by the strong lifts in Australia and in the US markets.
For this year, Rabobank expected a small production rise, and that was likely to flow through in quarters one and two.
Exports were likely to grow by 3%, boosted by a currency advantage over Australia, which might provide a comparative advantage for US beef importers in securing New Zealand product in quarters one and two.