Beef prices rise on India cattle sale ban
INDIA’S move to ban the slaughter of its cattle has sent global beef prices higher in recent days, amid concerns of reduced supply from the world’s biggest exporter of the meat by volume.
India’s government last week decided to ban the sale of cattle – which include cows and buffalo – for slaughter at livestock markets. The government said the order was aimed at preventing uncontrolled and unregulated animal trade. The decision applies throughout the country, effectively cutting off the supply of meat for processors, challenging an industry that exports roughly $5.4bn worth of beef annually.
The rules are being challenged in courts by several state governments, and could take many weeks to take full effect, but some investors are already betting that worldwide beef supply could tighten.
On Friday, the Australian Eastern Young Cattle Indicator – the benchmark for Australian cattle prices – ended up nearly 0.8 per cent. In the US, live cattle futures on the Chicago Mercantile Exchange soared to their upper limit, rising 2.5 per cent, with the India ban contributing to the price gains, analysts said.
“There has been a lot of market chatter around this and the Australian market has been bid up particularly,” said Tobin Gorey, a Commonwealth Bank analyst.
Cattle prices have started to recover in recent months as global supplies have tightened with increasing beef consumption. However, prices are still well below historic highs as US production remains strong, and Australian cattle numbers have started to recover following recent droughts.
Analysts are unclear on the extent of the global impact should India’s beef exports end. The issue is complicated by the fact that exported Indian beef – largely sourced from water buffalo – is a lowend product.