In the world of beef, a significant divide has emerged, with the United States experiencing soaring cattle prices while Australia grapples with a decline. This stark contrast in beef prices, the widest in a decade, carries far-reaching consequences for the global beef industry, influencing trade volumes and impacting farmers and consumers alike.
Rabobank's recent report, "Global Beef Markets: Lower Demand in Most Regions and Diverging Prices to Affect Exports," sheds light on this unfolding scenario. While North America and Europe maintain healthy demand for beef, other regions witness a reduction in consumer appetite, leading to a softening of beef prices.
One contributing factor to this shift is the combination of reduced demand and fully loaded supply chains. Significant beef stockpiling occurred in Asia in anticipation of economic recovery post-COVID, resulting in an oversupply of beef that has yet to find its place in the market. This surplus extends beyond beef, affecting pork and chicken as well.
In the United States, beef prices have surged, exceeding the 12-month average and reaching $7.79 per pound for July in the all-fresh retail category. This represents a 6% increase from the previous year, even as domestic consumer beef demand experienced a marginal 1% decline. Concurrently, US beef exports for the second quarter dipped by 14%, while imports rose by 5%. Notably, exports to South Korea, Japan, and China witnessed a 14% decline in the first half of 2023.
Mexico Filling the Gap: Mexico continues to serve as a prominent source of beef imports to the US. However, Mexico faces drought challenges, particularly in regions responsible for animal feed production. Despite these hurdles, Mexico has exhibited robust performance in exporting feeder cattle and calves to the US, marking a substantial 38% increase in the first half of this year.
Cattle Supply Outlook: Analysts foresee a prolonged shortage of cattle in the US, with cattle contracts achieving record highs. The delayed replenishment of the US cow herd indicates that market strength is likely to persist well into 2024, if not beyond. This evolving scenario underscores the significance of global beef price disparities and their far-reaching effects on the industry.
Photo Credit: gettyimages-pamwalker68
Categories: Michigan, Livestock, Beef Cattle