INTERNATIONAL

Cost-conscious consumers and production changes are influencing global beef trade

Beef

The divergence between cattle prices in the two hemispheres that occurred throughout 2023 appears to have stabilized, but seasonal conditions continue to influence markets where consumer demand is weaker, informs Rabobank.

Posted on Feb 29 ,00:15

Cost-conscious consumers and production changes are influencing global beef trade

Without strong demand pulling volume through the supply chain and bidding prices up, price setting falls back to the producer end of the chain and, with it, increased exposure to seasonal conditions and producer sentiment. The outlook for global beef production remains neutral, with increases in Australia and Brazil offsetting declines in Europe and the US.

Beef demand is expected to remain steady in 2024. The strength of the economic outlook in different beef-consuming markets creates an interesting overlay to the global beef production situation and the balance of trade. With limited or negative real wage growth expected in 2024, coupled with the higher cost environment, we believe global beef consumption will at best remain steady and possibly decline through 2024, with some notable regional variations.

Supply and demand dynamics may swing trade flows toward the US. China’s import demand should remain sluggish in 2024 – at least in the first half – and with demand strength and lower domestic supplies in the US, beef trade is already being diverted to the US. If China’s recovery is better than expected, global beef markets could become quite tight, fueling price rises.

Although the prospects of increasing beef demand may not be strong, we retain a positive outlook on the market. With US production declining and its economic outlook being reasonable, the US is likely to lead the beef price-setting market. This is likely to draw increased volumes from Australia, New Zealand, and Brazil, along with trade from Canada and Mexico. But value will become the predominant theme across most markets in order to retain consumers faced with balancing the tighter economic conditions.

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