“Where’s the beef?” is a slogan coined by hamburger chain Wendy’s and is one of the most successful ad campaigns of the past few decades. But in light of a big decline in U.S. beef production next year, global beef users might be asking the same question about U.S. beef. U.S. production is expected to decline to 12.02 million metric tons (mt), down just over 6% from the expected 2022 total of 12.82 million mt.
Drought conditions in much of the U.S. in 2022 have resulted in high culling rates and earlier-than-normal placements of cattle in feedlots, says USDA’s Foreign Agricultural Service (FAS). This will result in a smaller cattle herd in 2023. Another USDA agency says that as of Nov. 1, 76% of the U.S. cattle inventory continued to be mired in varying degrees of drought. Through the latest reporting period, weekly beef cow slaughter was up 12.3% from a year ago.
FAS forecasts that U.S. exports will be 14% lower than 2022’s record volume. Tighter cattle supplies and potential heifer herd retention will be reflected in lower beef production, thus constraining exportable supplies. Nevertheless, U.S. exports are expected to remain historically elevated on firm demand in key markets, FAS said. Global buyers, it seems, will have to turn to using more Brazilian beef, although it is of a very different quality to U.S. beef.
Global beef production in 2023 is forecast fractionally lower, as falling North American and European Union production offsets gains in Brazil, China and Australia, FAS says. Brazil production is expected to increase 1% to 10.45 million mt based on firm global demand in key markets, although higher input costs and a weak domestic market will constrain growth. In China, higher cattle inventories are anticipated to support a 5% increase in beef production. Meanwhile, Australian production is expected to surge 13% to 2.21 million mt on improved pasture conditions, FAS says.
Global exports in 2023 are forecast down 1% due to lower import demand, particularly in China, FAS says. Nevertheless, lower total exports from North America and India are expected to benefit Australia and Brazil. Reduced North American competition in East Asia and rebounding Australian production will allow Australia to boost its shipments and increase market share. Meanwhile, Brazil’s exports are forecast to be record high, as aggregate exports from its main competitors (Argentina, Paraguay, Uruguay and India) are expected to fall 3%. Smaller cattle inventories are expected to weigh on the exportable supplies of Argentina, Paraguay and Uruguay. As for India, exports are expected to be unchanged from 2022, with limited growth to a number of markets, FAS says.
Brazil’s beef exports in 2023 are forecast up about 1%, FAS says. It will maintain its position as top exporter, accounting for approximately 25% of beef exports by major traders. China is expected to remain Brazil’s largest market despite lower total beef imports due to increased domestic supplies. Argentina and Uruguay, Brazil’s main competitors in China, will have tighter supplies of cattle, limiting their exportable supplies. Furthermore, Brazil exports only frozen, boneless beef to China and at more competitive prices than New Zealand and Australia, making its shipments more attractive amid the economic slowdown. In addition to China, Brazil’s shipments to the Middle East and Southeast Asian markets are expected to climb while India’s exports are expected to be stagnant, FAS says.
Meanwhile, the latest export data reveals that U.S. beef exports in September declined year over year in value and volume, while Australian exports in October again performed poorly. The value of U.S. beef exports in September slid below year-ago levels, below $1 billion for only the second month this year. Exports totaled 115,487 mt, valued at $890.3 million, down 7% from a year ago in both volume and value. But for the first nine months of 2022, beef exports were still 4% above last year at 1.12 million mt. Export value reached $9.12 billion, up 20% and already achieving the second highest total for any calendar year, trailing only the 2021 record of $10.58 billion.
Australian beef exports continue to perform poorly. For the year to the end of October, exports reached 708,778 mt, down 3.7% from the same period last year, Jon Condon of Beef Central says. Barring a miraculous turnaround in the last two months of the year, which seems unlikely, full-year exports for 2022 may struggle to reach 850,000 mt. That will come on top of a 36-year record low export volume of 887,679 mt last calendar year. But according to FAS, Australian exports will start to rebound next year. That means the U.S. will start to see more Australian manufactured beef going into the food service channel. — Steve Kay
(Steve Kay is editor/publisher ofCattle Buyers Weekly,an industry newsletter published at P.O. Box 2533, Petaluma, CA, 94953; 707-765-1725. Kay’s Korner appears exclusively in WLJ.)
