TL;DR:
- Global beef consumption is expected to remain steady or possibly decline in 2024 due to limited or negative real wage growth and a higher-cost environment.
- Beef, being a premium protein, faces challenges in maintaining consumption levels amidst economic pressures, with potential impacts on supply chain margins and trade dynamics.
- The US is likely to lead the beef price-setting market due to declining production and a reasonable economic outlook, influencing global beef trade flows and consumer market strategies.
In 2024, global beef consumption is anticipated to face challenges, remaining steady or potentially declining, as forecasted by Rabobank in its Q1 Global Beef Quarterly report. This projection is based on expectations of limited or negative real wage growth coupled with a higher cost environment, which could impact consumer spending on beef, considered a premium protein.
The report raises critical questions for the supply chain regarding the balance between maintaining or increasing prices to compensate for reduced consumption and adjusting retail prices to boost consumption.
In markets like the United States, where beef production growth is limited, consumers may tolerate higher prices, albeit with reduced consumption, to maintain demand. Conversely, in markets experiencing supply growth, such as Australia, lower prices might be necessary to encourage consumption. These dynamics are expected to influence beef trade flows, particularly towards the United States, which is seeing strong import demand and lower domestic supplies.
Rabobank’s analysis suggests that Chinese import demand for beef may remain sluggish in the first half of 2024, while the US experiences strong demand. This scenario has already led to a redirection of beef trade towards the US, with significant increases in exports from Brazil and Australia to the US market. Should China’s recovery exceed expectations, the global beef market could tighten, potentially fuelling price rises.
Despite the uncertain prospects for increasing global beef demand, Rabobank maintains a positive outlook on the market, with the US expected to lead in beef price-setting. This situation is likely to attract increased volumes from Australia, New Zealand, and Brazil, as well as trade from Canada and Mexico. The emphasis across most markets will likely shift towards value to retain consumers amid tighter economic conditions.
The report also reflects on beef consumption trends in 2023, noting that retail beef prices have risen across most markets since 2019 due to various factors, including restricted supplies and additional costs. Despite higher prices, beef consumption has remained relatively flat to slightly declining over the past three years, influenced by prices and household incomes.
The impact of inflation in 2022 and 2023 further strained consumer budgets, altering meat spending patterns and leading to a shift towards cheaper price point options.
In Australia, the cattle market remains in the hands of producers, with increasing cattle inventory levels and weak consumer demand, except in the US market. Australian cattle prices are heavily influenced by producer sentiment and marketing activity.
The report highlights that large volumes of cattle in the system provide buyers with plenty of choices, negating the need for processors to chase cattle, thus any market floor is generated by producer marketing activity.
Looking ahead, consumer markets, particularly Australia’s Asian export destinations, are expected to remain weak in the first half of 2024 before stocks clear and flows start to recover. This outlook underscores the complex interplay between supply, demand, and economic factors shaping the global beef market in the coming year.
