2016 Watch: beef from Brazil, bottled Canadian air, drought-tolerant grain
To prove Black Swans is not always gloomy, here are some sectors to consider for 2016. Firstly, many are predicting a good year for beef exporters, due to a tight supply of beef worldwide supporting global prices, with China expected to play a pivotal role in the beef industry. One key note in 2016 is that Brazil will gain access to the US cattle market, and although it is unknown how much this trade opportunity will generate in revenue for Brazil, the deal will help facilitate entry into other markets via the US, with predictions that Brazil will be among the top exporters to watch in the beef business for 2016. Secondly, as highlighted in our China Middle Class brief, an intriguing new business is taking off in China - bottled fresh air from Canada. With pollution levels high in Beijing and its first ever red alert last week, sales of this product, made in Alberta and called Vitality Air, have rocketed, with Chinese customers emptying their stocks. Furthermore, a report yesterday revealed a respected restaurant in China is charging its patrons for clean air, as it is fast being seen as a luxury; winter sales of air purifiers quintupled over the last quarter in China. Finally, with climate change and the El Nino causing drought conditions worldwide, consumers, policymakers and activists have been coming together to look at alternatives, with one ancient crop slowly grabbing attention: millets. Millets are an ancient, staple food that was grown across most of the world until rice, corn and wheat took over; now it is primarily grown for bird seed. The reason some are starting to take note are because millets are robust dryland crops, with many varieties inherently drought-tolerant, that can be grown from seed quite easily in higher temperatures in skeletal soils and seldom need synthetic fertilisers; they are gluten-free, ideal for long bouts of travel and can be harvested 45 days after cropping, allowing mobility after the short growing season.

Rabobank Global Beef Quarterly Q4

Rabobank Global Beef Quarterly Q4: Ongoing Tight Supply to Support Prices

Tight supply will support prices in 2016 as demand is expected to remain firm even though supply pressure is easing. China and the US will be the main import markets to watch in 2016—in particular the strength of demand, given high prices. According to Rabobank’s Global Beef Quarterly Q4 2015 report, Australia, Brazil, India and the US will be the main exporters to watch—in particular the supply of cattle and beef, in response to rebuilding pressures at different points in the cycle.

China continues to play a critical role in the global beef market despite a slowing economy. Although the domestic market has been volatile due to the impact of the grey channel, it will continue to offer sustainable opportunities for the rest of the world. According to Angus Gidley-Baird, Senior Animal Protein Analyst at Rabobank: “The introduction of live cattle trade for slaughter or feeding in China provides domestic players the opportunity to offer imports as fresh chilled beef to retail markets, claiming a premium over traditional imports of frozen meat.” It is expected that new provinces and players will join live cattle imports in 2016, although volumes will be restricted by low cattle availability out of Australia.

Highlights from the Global Beef Quarterly Q4 2015 report:

• It is expected that Brazil will access the US fresh beef market in 2016. This not only provides access to the US but will also facilitate entry to other markets.

• The factors that created large amounts of uncertainty and volatility in the US in 2H 2015 are expected to ease in 2016.

• After consecutive years of record production and exports, Australian cattle supplies tightened considerably in October and November.

• In 2016 the first major food & agribusiness company will start sourcing verified sustainable beef, signalling the move beef is making into the consumer trend for sustainably produced food.

ENDS

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