The global beef market is a story of contrasts, according to a new Rabobank report.
The southern hemisphere is dominated by low prices and increasing production while in the northern hemisphere there are high prices and contracting production.
In Rabobank’s latest Beef Quarterly Report,North American cattle prices continue to track at high levels, with United States cattle prices steady and Canadian prices up 3% between June and October.
“In southern hemisphere countries, prices remain soft. Australian cattle prices dropped dramatically – down 28% since June – while New Zealand and Brazil also saw prices fall, but by smaller amounts,” the report says.
Northern hemisphere and southern hemisphere beef production levels are also trending in opposite directions.
“Southern hemisphere production centres continue to increase volumes. However, the increases in Australia and Brazil have not been enough to offset the declines in Europe and the US.”
Rabobank’s senior animal proteins analyst, Angus Gidley-Baird, said with the New Zealand season heading towards the traditionally lower slaughter months, the reduction in supplies initially resulted in an appreciation of cattle prices.
“The North Island bull price rose a small but steady 2% over the four weeks to October 27 to $6.15/kg. However, in the weeks since, it has fallen to $5.95/kg – dropping it back in line with the five-year average.”
Beef export volumes for September were down five per cent year on year. Volumes to China declined by 30% and value dropped by 46% compared to September 2022, he said.
“However, shipments to the US in September jumped by 35% YOY, reflecting slower consumer demand in China and stronger demand in the US.”
The report says global beef production is on track to decline by 1% in 2023, with 2024 production likely to play out in similar fashion.
“The volume balance for the major beef producing and consuming regions of the world that we track will remain relatively constant in 2024. The aggregated production volumes of the major producing countries are expected to remain similar to the expected volumes in 2023,” it says.
While overall production and consumption in 2024 are expected to remain steady, trade will need to shift product according to changes at the individual country level.
“The US will be one of the big movers. After shifting to a net-import position in 2023, we expect production to contract a further 4.5%, while consumption drops 3% in 2024, increasing the net-import position.
“Australia and Mexico will be the major beneficiaries, with increases in production and exports expected for both countries. New Zealand, another large supplier to the US – particularly in lean trimmings – will also benefit, but restricted production and export growth will limit the gains.”
The report says in 2023, many markets – particularly in Asian countries – did not experience the growth in consumption expected as economies recovered from covid-19, and it was clear that consumers were being much more cautious in their purchase decisions. These conditions are expected to continue.
Rabobank said the conflict in the Middle East is not expected to materially impact beef trade.
“The import volumes of Israel and the Palestinian territories make up approximately 1% of global beef imports.
“If the conflict extends across the broader Middle East and North Africa region, the impact on global beef trade remains relatively small.”