Consumer caution casts shadow on global beef sector in 2024, Rabobank reports

GLOBAL – The global beef sector is anticipated to face challenges in 2024 as consumer caution continues to impact demand for premium cuts, according to a report by Rabobank, a Netherlands-based financial services group with a focus on agri-banking.

The report highlights the ongoing slow global economic recovery as a key factor limiting consumer spending on beef.

Rabobank noted that the expected economic rebound, particularly in Asian economies, post-COVID-19 has not materialized, leading to increased consumer caution.

“In China, consumer preference is shifting towards value-for-money products, with reduced emphasis on premium options.”

The report suggested that initial support for consumer caution may come from increased volumes of Australian and South American beef, while North American beef, particularly the more expensive cuts, may see reduced volumes.

However, Rabobank warned that if U.S. production contracts to the point of exerting upward pressure on global beef prices, there could be pushback from consumers, potentially leading to squeezed margins in beef supply chains.

The dynamics in the global beef market remain divided, with high prices and contracting production in the Northern Hemisphere, and lower prices and increasing production in the Southern Hemisphere.

According to the report, North American cattle prices continue to track at high levels, while Southern Hemisphere prices, especially in Australia, have seen significant drops.

Rabobank’s report also noted that global beef production across monitored markets is expected to decline by 1% year-on-year in 2023, with a similar trend forecasted for 2024.

The Southern Hemisphere, including Australia, is also contributing to the increase in production volumes, but it has not been sufficient to offset production declines in Europe and the U.S.

While Rabobank notes ongoing strong consumer demand for beef in the U.S., it acknowledged the possibility of weakening demand. In Asia, weak demand and high inventory levels are challenging the market.

The report concluded with a mention of the conflict in the Middle East, stating that it is not expected to significantly impact beef trade.

However, the bank highlighted the potential indirect impacts of fuel and energy costs, as well as the importance of the Middle East as an import market for poultry and sheepmeat.

Rabobank’s senior animal proteins analyst, Angus Gidley-Baird, suggested that for the Australian beef sector, the market may have reached the bottom.

Despite challenges such as higher cattle volumes and processing constraints, stability is expected to return as producers gain certainty about stock numbers. The report also anticipated increased slaughter numbers in the first quarter of 2024.