In its most recent Global Beef Quarterly, Rabobank presents a detailed analysis revealing a pronounced dichotomy in the beef markets across hemispheres. The United States is navigating a period marked by escalating prices and diminishing beef production.
This stands in stark contrast to the Southern Hemisphere, particularly in countries like Australia and Brazil, where there’s a notable increase in beef production alongside declining prices.
The US beef market is entering a contraction phase in the fourth quarter of 2023, following a prolonged period of herd reduction. This is anticipated to result in a decrease in beef production, leading to a heightened need for imports and a downturn in exports.
Conversely, Australia and Brazil are witnessing a surge in production, poised to enhance their export capabilities.
Angus Gidley-Baird, a senior analyst specialising in animal protein at Rabobank, observes that these divergent cattle cycles, influenced by distinct weather patterns, are reshaping the global beef trade landscape. This trend is expected to continue into 2024.
Despite the production increases in Australia and Brazil, they fall short of compensating for the production declines in Europe and the United States.
The overall equilibrium in beef production and consumption among the major beef-producing and consuming regions is likely to remain stable. Nonetheless, trade adjustments will be required to address the changes at the country level.
The United States, for example, is projected to transition to a net-import position in beef, with an expected further reduction in production by 4.5% and a 3% decline in consumption in 2024.
Countries such as Australia and Mexico are positioned to benefit from these market shifts. New Zealand is also expected to gain, although its potential is constrained by its production and export capacities. Brazil is on track to achieve a new record in beef production in 2024, with a forecasted growth of 1% to 2% year-over-year. This growth is likely to support a 2% to 3% increase in Brazilian beef exports.
In China, a significant beef market, a more rapid growth in imports is anticipated in 2024, potentially surpassing 5%. This increase is driven by a resurgence in demand, particularly in the foodservice sector, with a noticeable shift in consumer preference towards more cost-effective beef products.
Argentina is also expected to experience an increase in its beef exports to China, estimated at a 5% to 7% rise in 2024.
The recommencement of live cattle imports from Laos to China in September is another contributing factor to the growing demand in the Chinese market. Additionally, the European Union’s upcoming regulation on deforestation-free products, effective in 2024, could influence global beef import flows.
With a decline in cattle numbers in the EU, a reduction in beef production of approximately 1.5% is anticipated in 2024, which could have broader implications for the global beef trade.
Rabobank also points out the potential for beef supply chain margins to be under pressure in 2024 as they adapt to higher prices and evolving consumer demands in a gradually recovering global economy.
While the conflict in the Middle East is not anticipated to directly impact the beef trade significantly, as the region accounts for about 1% of global beef imports, indirect effects could arise if there are increases in fuel and energy costs. This could lead to a global rebalancing of protein trade, particularly affecting the poultry and sheep markets, where the Middle East is a significant participant.
