Beef on the boil

THERE is some shine on the beef market with stronger than expected demand in the global beef markets filtering down to Australia’s market.

Off the back of high cattle numbers brought on from a period of very high prices, beef has been in the doldrums as the glut of females filter through the system.

But according to Rabobank’s recently-released Global Beef Quarterly, the future of beef in Australia is looking up.

The report reveals that Australian beef production has remained high and exports hit new records as cattle prices have started to lift.

Report lead author, RaboResearch senior animal proteins analyst Angus Gidley-Baird, said beef markets had seen record production and exports in Brazil in quarter two, while China had a record volume of imports in the first half of the year.

“Production volumes in the United States were higher than expected and prices in Europe had remained remarkably strong.”

Looking forward, the report says, beef markets are waiting for signals of what is expected to unfold, most significantly a contraction in US production, improved cattle prices in Brazil and a possible reduction in consumption in the US following both the end of summer grilling season and persistent high beef prices.

The report also shows that cattle prices continue on different trajectories across markets, with North American prices remaining at elevated levels and southern hemisphere prices, while still at significantly lower levels than the US, showing some signs of life, although Brazil’s prices have drifted lower.

Notwithstanding these declines, global beef production in quarter four is still expected to be 3.8 per cent higher than the 10-year average.

“We then expect it will contract, mainly due to lower production volumes in the US and Brazil,” Mr Gidley-Baird said.

China, the world’s largest beef importer, taking 34.6 per cent of total global trade in 2023 has dominated global markets for the past five years, the report says.

But now, slowing economic growth and a declining population is seeing changing consumer trends in China which are impacting the beef product mix.

Mr Gidley-Baird said the Chinese beef market still has ample growth potential, given per capita consumption is lower than other developed Asian countries.

“However, new consumer trends are emerging which will change consumption.

“Overall, the premiumisation trend is slowing and consumers are pursuing both quality and value.”

He said while Chinese consumer markets showed a clear trend for pursuing value for money, consumption of beef was still growing, albeit soft prices suggest more sensitivity to expensive cuts.

“Rising beef consumption volumes, despite slower income growth in China, show consumers there are continuing to seek higher-quality proteins, but at reasonable prices.

“Currently, retailers and food service operators in China are under pressure to deliver cheap and basic cuts, such as shin, shank and belly, and good-value cuts at discounted prices.”

Production volumes and exports remain strong for Australian beef, the report stated.

Dry conditions in southern areas in the first half of the year have limited the numbers of heavy finished grass-fed cattle, but good seasonal conditions in the north continue to support high slaughter numbers.

Weekly Australian cattle slaughter numbers remain around 140,000 head per week, up 20 per cent on the five-year average.

Mr Gidley-Baird said given their expectations for the number of cattle in the system, Rabobank believed slaughter numbers would continue at these rates into the latter part of the year.

The report said Australian cattle prices rose sharply in July, particularly finished steer and cow prices, which lifted 15 per cent and 32 per cent respectively in the month.