Cattle prices holding; production contracting

Global beef production is beginning to shift downward as cattle market prices are moving along at two different speeds. According to Angus Gidley-Baird, Senior Animal Protein Analyst for Rabobank, North American markets are nearing record highs while other markets remain more restrained.

“Changes in production and prices in different regions are starting to shift trade flows with the U.S. increasing import volumes while imports in major Asian markets remain relatively flat,” Gidley-Baird notes in Rabobank’s Global beef quarterly Q2 2024 .

Rabobank is also keeping an eye on animal disease risks due to their potential impacts on global beef—specifically H5N1 avian influenza and food-and-mouth disease.

“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,” says Gidley-Baird.

In May, Brazil declared itself free from FMD without vaccination. The country is now seeking official recognition by the World Organization for Animal Health, which could significantly boost Brazil’s trade prospects. At the same time, there is concern for a potential H5N1 outbreak in the Brazilian commercial poultry sector as the country is the largest exporter of poultry meat. Gidley-Baird notes any disruption to market access could indirectly impact beef prices and exports.

U.S. beef and cattle demand kicked off 2024 on a high note. The April USDA all-fresh beef retail price was at a record high, $7.95/pound, while the comprehensive beef cutout value averaged $302/hundredweight and fed steer prices were $184/cwt. “Those marks produced demand highs for the markets not seen in 25 years or more. Year-to-date prices were 10% and 5% higher, respectively, than last year in these markets,” Gidley-Baird notes.

U.S. beef supplies remain stronger than expected with increasing carcass weights and imports offsetting slaughter declines.

As for the rest of North America, Mexico herd expansion has supported both domestic and export markets, but drought could limit herd growth for 2024. While Canadian retail beef prices are rescinding from record highs, slaughter numbers and carcass weights support record high production. On a beef-equivalent basis, total cattle and beef exports to the U.S. are up 14.5% year-to-date versus the same period in 2023.

For Brazil, beef export volume in April was the largest in history. Calf prices also improved for the second month in a row, possibly indicating price increases coming.

In Europe, prices remain elevated despite a jump in production. Rising levels of imports also suggest strong beef demand.

Australia is seeing some balanced markets but contracting U.S. production is starting to seep into the country. Favorable feed and farmgate prices are aiding returns in New Zealand.

Beef prices continue to fall in China due to weak demand. Cattle slaughter increased while beef imports grew in Q1. However, Rabobank expects imports to slow down in the coming quarters, citing high frozen beef inventories and stagnant demand.

Beef consumption remains sluggish in Japan despite demand from foreign visitors. Inventory levels are high and import volumes are anticipated to decline.

The global beef supply chain is also facing a few notable challenges, including new climate disclosure rules. In some regions such as the EU and New Zealand, companies are required to report their climate impact.

RaboResearchers point to one specific issue for the beef industry—scope 3 emissions, which are substantial, yet difficult to measure. Under the reporting regulations, large beef companies will be required to navigate the complexities of collecting and reporting accurate emissions data. However, Gidley Baird notes comparable emissions data and standardization will be needed for companies to comply.

“At the farm level, carbon calculators and measurement tools will become important to facilitate a bottom-up approach to measurement,” concludes Gidley-Baird.