Cattle prices are expected to remain stable even as beef production faces an impending downturn, according to Rabobank’s latest Global Beef Quarterly report.
As the market approaches the second half of 2024, Rabobank Senior Animal Protein Analyst Angus Gidley-Baird indicates that global beef production volumes are set to decline compared to the same period last year. Significant contractions in Europe and the U.S. will drive this reduction.
In contrast, Australia and Brazil will boost their beef production, but not enough to offset the global decline. China’s beef market will experience a brief uptick in the second quarter, followed by a subsequent decrease, aligning with the global downward trend.
The report also highlights animal health concerns, noting the recent transmission of H5N1 avian influenza to dairy cattle.
“We continue to monitor the recent transmission of H5N1 avian influenza to dairy cattle, although no cases have been reported in beef herds, and beef food safety remains uncompromised,” Gidley-Baird said.
The report noted Brazil recently declared itself free from foot-and-mouth disease without vaccination. Brazilian authorities have asked the World Organization for Animal Health for a change in status that could potentially boost its trade prospects. However, avian influenza in Brazil could disrupt the poultry industry, indirectly affecting domestic meat markets and beef prices and exports.
Global markets
The contraction in U.S. production has led to an increase in exports from Brazil and Australia.
Brazil’s beef market is seeing a resurgence, with April’s beef export volume marking the highest in history. Robust demand from China accounted for 45% of total exports, and in the first four months totaled 375,000 metric tons. Total exports year to date as of April were 835,000 metric tons, an increase of 37%. Calf prices have recovered for the second consecutive month, signaling potential price increases on the horizon.
In Australia, domestic markets are balanced, but the contraction in U.S. production is starting to impact Australian markets. Export volumes to the U.S. have increased significantly, with year-to-date volumes up 89%. Despite the increased export volumes, Australian cattle prices remain relatively stable due to soft demand in key Asian markets and full supply chains.
China’s beef market is experiencing fluctuations, with an increase in cattle slaughter driven by losses in farming, pressuring beef prices in the second quarter. While beef imports grew strongly in the first quarter, they are expected to slow down in the coming quarters.
Europe experienced increased beef production in early 2024, yet prices remain high. This reflects relatively strong demand bolstered by rising import levels. Volumes of beef imports to Europe were up 5% in the first two months of 2024. However, imports from Brazil were down 13% during that period as well as frozen deboned beef (14%) and prepared products (26%).
Japan’s beef market is struggling with weak household consumption, down 13.9% over the five-year average, despite some recovery in demand from overseas visitors. High inventory levels and declining import volumes indicate sluggish overall consumption, presenting challenges for beef exporters aiming to penetrate the Japanese market.
U.S. outlook
The report said the demand for beef and cattle has been the highest in recent decades.
The April USDA All-Fresh Beef retail price reached a new record high of $7.95/lb., driving year-to-date consumer beef demand to its second-highest level in the past 30 years. USDA’s April comprehensive boxed beef cutout value averaged $302/cwt, while fed steer prices were $184/cwt. These figures reflect demand levels not seen in over 25 years. Year-to-date prices in these markets were 10% and 5% higher, respectively, compared to last year.
The report noted that cattle markets remain robust, with some reaching record highs. Strong beef demand and generally lower cattle supplies have supported cattle markets in 2024, regardless of weight class.
In March, the weekly U.S. average price for 500-lb. steers hit a new record high of $337/cwt. Similarly, March fed steer prices reached new weekly highs at $190/cwt, though 800-lb. steer values peaked at $247/cwt, $3.50/cwt lower than the September 2023 record. Calf and fed cattle prices are expected to trend sideways or soften through summer, while feeder cattle are likely to find better price support. — Charles Wallace, WLJ contributing editor
