Ireland has bucked the trend and increased its beef production by 6% between January and October, compared to the same period in 2021, according to the latest report from Rabobank.
According to the report, Rabobank said that 2022 was a year to remember for the global beef industry, with record retail and farmgate prices in many regions due to strong consumer demand and limited supplies.
Brazil also achieved record export volumes and returns thanks to growing Chinese demand. However, consumer sentiment softened in late 2022, leading to weaker beef prices in early 2023.
Beef production
Total beef production is forecast to be steady in the first quarter of 2023, with a 5% lift in Australian and 2% increase in Brazilian production, almost enough to offset declines in the US, EU, and New Zealand.
The global supply through 2023 is expected to become more limited as US production dips.
Cattle prices across most regions have continued their downward trend, with the notable exception being the US, where more limited supplies are providing price support.
“Consumer sentiment weakened in late 2022, leading to a softening in beef pricing that has flowed through into early 2023,” Angus Gidley-Baird, senior analyst – animal protein at Rabobank said.
“While the supply of beef should remain favourable for prices, consumer confidence will continue to be a key factor in determining beef returns.”
Opportunities
China will be a key focal point in 2023, as the country emerges from Covid-19 lockdowns amid a slowing economic environment.
The lifting of Covid-19 restrictions is expected to lead to a rebound in household consumption, including a potential increase in beef consumption. Chinese demand for beef will pick up in the second half of the year, boosting global beef prices.
The contraction of US production is another a focal point, accordingt to Rabobank.
“The beef cow inventory has dropped to the lowest point since 1962, and feed-yard inventories are showing a decline,” Gidley-Baird added.
“This is expected to cause a redistribution of global beef supplies and an overall tightening of the market.”
The report was evidently compiled before the recent confirmation of a BSE case in Brazil.
The report states that the Brazilian beef supply is expected to be even higher this year, with China remaining Brazil’s main export destination, though average import prices in 2023 will likely drop due to the increase in volumes.
China was a top-three US beef export destination in 2022, but growth in export volumes slowed throughout the year. As US supplies decline and prices increase, the US will face continued headwinds into China over the medium-term.
“The decline in US volumes should support increased trade from Australia,” Gidley-Baird explained.
“Australia’s volumes will likely lift as prices ease, further supported by the potential increase in demand for chilled products with the growth in China’s retail beef sales.
“Meanwhile, an increase in retail sales via e-commerce and growth in the prepared dish market will provide opportunities for New Zealand exporters to capture more value,” he added.
Beef production in Europe
According to Rabobank, beef production in the 27 EU member states and the UK contracted by 1.3% for the first 10 months of 2022, compared to the same period in 2021.
Production in Germany declined by 8%, in France by 4%, in The Netherlands by 1%, while it increased in Ireland by 6%, Spain by 4% and the UK by 1%.
Although high milk prices in 2022 may have slowed the rate of contraction in the dairy herd across Europe, the beef market is expected to remain tight, with an expected reduction decline of 0.5% year-on-year for 2023.
Beef price
According to the report by Rabobank, beef carcass prices have been holding up well in the beginning of 2023 after they rose at the end of 2022.
The average beef carcass price was up by 16% year-on-year in week 3 of 2023.
The expected decline in purchasing power in Europe remains a risk to beef prices, should consumers trade down more aggressively, according to Rabobank.