Divergent Trends in Beef Production and Pricing
The global beef market is currently experiencing a stark contrast between the Northern and Southern Hemispheres, as highlighted in Rabobank’s latest Beef Quarterly Report. In the Northern Hemisphere, high cattle prices and decreasing production are the prevailing trends.
This is particularly evident in North America, where US cattle prices remain steady and Canadian prices have seen a 3% rise over the quarter.
Conversely, the Southern Hemisphere is witnessing softer cattle prices alongside increasing production. Australia, in particular, has experienced a significant 28% drop in cattle prices this quarter. New Zealand and Brazil also reported price declines, albeit to a lesser extent.
Global Production and Consumption Trends
Despite the production increases in the Southern Hemisphere, they have not been sufficient to counterbalance the declines in Europe and the US. Consequently, global beef production is projected to decrease by 1% in 2023. For 2024, production volumes from major producing countries are expected to remain relatively stable compared to 2023.
The report also anticipates that overall beef production and consumption will remain steady in 2024. The US is expected to be a key player, transitioning to a net-import position in 2023 and likely to see a further contraction of 4.5% in production and a 3% drop in consumption in 2024. This shift will increase its net-import position.
Beneficiaries of the Market Shift
Countries like Australia and Mexico are poised to benefit from these changes, with both expected to see increases in production and exports. New Zealand, another significant supplier to the US, particularly in lean trimmings, will also benefit. However, restricted production and export growth in New Zealand may limit these gains.
Consumer Spending and Market Dynamics
The report suggests that the slow global economic recovery will likely constrain consumer expenditure, potentially affecting spending on beef in the coming year. This trend has been noticeable in Asian markets, where the anticipated growth in consumption post-Covid-19 has not materialised as expected.
In China, there is a noticeable shift in consumer preference towards value-for-money products over premium ones. This shift may initially be supported by reduced volumes of more expensive North American beef and increased volumes of Australian and South American beef.
However, a contraction in US production could eventually exert upward pressure on global beef prices, potentially leading to consumer resistance. The report speculates that 2024 might witness squeezed margins in beef supply chains as they strive to manage higher prices and accommodate consumer preferences.
