Rabobank’s latest Quarterly report forecasts beef demand will remain steady this year, despite economic challenges shifting consumers toward lower-priced protein options.
“While there was some channel shifting and movement to lower-priced options for beef, overall demand held up relatively well in 2023, supporting consumption levels,” said Angus Gidley-Baird, senior analyst in Animal Protein at Rabobank, in a news release.
He continued, however, “Questions about economic performance, income levels, costs, and the direction of monetary policy remain unanswered, but we expect overall beef demand to hold in 2024 and, therefore, consumption levels to remain steady.”
Global markets
Cattle prices in the two hemispheres seem to have stabilized, with European cattle prices steadying and North American prices slowing their increase. The Southern Hemisphere has seen cattle prices level off and even increase in some areas.
La Niña weather conditions could support prices in areas such as Australia, but promote uncertainty in North America, pushing herdbuilding back even further, according to the report.
Rabobank’s outlook for global beef production remains neutral. Increases are expected in Australia and Brazil that will offset declines in Europe and the U.S.
Global beef consumption is expected to hold in 2024, even amid rising retail costs that have affected consumers since 2019.
“On top of beef price rises through 2021 and 2022, the impact of inflation in 2022 and 2023 added to the cost of living, pressuring consumers’ budgets and changing meat spending patterns,” the report said.
While this caused somewhat of a shift in demand to lower-priced options, beef demand still held up relatively well last year, Rabobank noted. This is expected to continue throughout this year, even with uncertainty surrounding economic performance, income levels and costs.
“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,” Gidley-Baird said.
US outlook
Drought conditions are expected to ease up in the first half of the year, benefiting cow-calf producers. Last October, nearly half of the U.S. beef herd was in moderate or worse drought. This number has since declined to 20% in February thanks to rain and snowfall in key cattle-producing regions.
Hay stocks were at 76.7 million metric tons as of Dec. 1, which is the third-lowest inventory in 20 years, but still 7% higher compared to 2022. Alfalfa prices are down 24% year over year and other hay prices are 6% lower due to stronger supplies and softer demand.
Weather conditions that have benefited cow-calf producers battling drought conditions have challenged feedyards. Wet and cold conditions are expected to decrease cattle performance, reduce carcass weights and diminish quality grades throughout the first half of the year. Carcass weights are already down 30 lbs. compared to the record-high 942 pounds in December.
The cow herd is down 2.5%, the smallest number since 1961. However, Rabobank projects a path toward herd stabilization this year.
“The current bred cow and heifer inventory was built for distressed range and forage conditions. Recent winter weather should benefit spring pastures, and relatively small gains in condition ratings can reduce cow herd culling in 2024,” the report said.
China’s import demand is expected to remain sluggish this year. With demand strength and lower domestic supplies in the U.S., beef trade is being diverted, the report said.
“Brazil’s exports to the U.S. in January 2024 were ahead of 2023, and Australian volumes were up 127% YOY. If China’s recovery is better than expected, global beef markets could become quite tight, fueling price rises,” Gidley-Baird noted.
The U.S. is likely to lead the price-setting market and draw more volume from Australia, New Zealand, Brazil, Canada and Mexico, Rabobank predicted.
“But value will become the predominant theme across most markets in order to retain consumers faced with balancing the tighter economic conditions,” Gidley-Baird explained. — Anna Miller, WLJ managing editor
