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07 Dec 2024
Global Beef Supply Declines Expected to Reshape Trade Dynamics
Global Beef Supply Declines Expected to Reshape Trade Dynamics
A global contraction in beef supplies is on the horizon, marking the first significant reduction since the COVID-19 pandemic. According to a recent RaboResearch report by Rabobank, herd reductions in major beef-producing countries will alter trade flows, tighten markets, and influence cattle prices globally.
Major Producers Face Production Declines
Brazil and the United States are projected to lead the global beef production declines by 2025. These two countries are expected to see the largest reductions, but other regions, including China, Europe, and New Zealand, are also likely to experience decreases in output.
Weather Patterns Remain a Key Factor
Weather conditions will play a critical role in production fluctuations. In the U.S., herd rebuilding efforts remain stalled due to inconsistent precipitation, with producers waiting for more dependable rainfall. Similarly, rain delays are slowing production in Brazil. Australia, which has enjoyed relatively favorable precipitation in recent years, faces the threat of dryness that could impact production.
The outlook for 2025 weather suggests minimal changes. El Niño Southern Oscillation models from Rabobank predict La Niña conditions to persist into the first quarter of 2025, followed by a transition to neutral patterns by midyear. This stability is expected to support Australian beef production.
Shifts in Trade Patterns
As supplies tighten, beef trade flows are set to shift dramatically. Angus Gidley-Baird, senior animal protein analyst at RaboResearch, highlights that Australian beef producers will increasingly depend on exports to handle rising domestic production. Meanwhile, Brazil is likely to focus on expanding exports to global markets, given limited domestic demand.
Cattle Prices Reflect Supply Contraction
Cattle prices are responding to global supply constraints. North American cattle prices have been high for nearly two years, driven by reduced herd sizes and strong consumer demand. In contrast, regions like South America, Australia, and New Zealand have historically experienced lower prices, though this trend is starting to reverse as tightening supplies firm up price support globally.
U.S. Herd Rebuilding Faces Challenges
In the United States, year-over-year declines in beef production are expected to remain modest. However, cow herd rebuilding remains stalled due to slower development of replacement heifers, limiting recovery in production.
As detailed in the Rabobank report, the global beef industry is entering a period of transformation. Producers must navigate a complex landscape shaped by shifting trade opportunities, evolving weather patterns, and changing consumer demands. The tightening global beef supply highlights the importance of strategic planning in the years ahead.
