While beef supply conditions are favorable for beef prices, consumer confidence will continue to be tested and affect beef profitability. China will remain in the spotlight as the world watches how quickly the giant emerges from lockdown amid a slowing economic environment. Chinese demand for beef is expected to pick up in the second half of 2023, pushing up global beef prices.

The US will be other focal point. After setting records for both the volume and value of beef exports in 2022, the numbers are starting to reflect a decline in production. The number of beef cows has fallen to its lowest level since 1962, and the number of livestock in feedlots is declining. The expected drop in US beef production will cause a redistribution of global beef supplies and a general tightening of the market.

Overall beef production is projected to remain solid in the first quarter, with Australian production up 5% and Brazil 2%, almost enough to offset the decline in the US, EU-27 and New Zealand. The supply picture through 2023 is forecast to remain tight as U.S. production falls.

While other countries lifted most restrictions from the pandemic by 2022, China continued to experience disruptions from the virus in addition to a slowing economy. Rabobank predicts Chinese demand for beef will pick up in the second half of the year, which will boost global beef prices.

While other countries have lifted most restrictions due to the pandemic by 2022, China has continued to experience disruption due to the virus in addition to the slowdown in the economy. Rabobank predicts that Chinese beef demand will pick up in the second half of the year, pushing up global beef prices.

Thanks to new technologies such as portable ovens and stoves, retail sales of beef have increased, where food service has traditionally been the main distribution channel for beef. This trend and the rapidly growing market for ready meals has led Rabobank to expect an increase in beef consumption in China.

In 2022, China increased beef imports by 15% to 2.68 million tons. It is one of the top three US beef exports. However, export growth is likely to slow due to reduced US supplies, leaving room for increased trade from Australia.

After increasing slaughter volumes in late November and early December, Australia continued to show the same high levels in early February, suggesting that more volumes are becoming available. According to a Rabobank report, slaughter volumes could increase by 10% in 2023.

Brazil is China's largest import destination and Rabobank expects more trading opportunities for the South American country next year. Brazil has reopened the Mozarlándia plant, which is the largest export facility to China. Eight other factories are awaiting permission to export to China, and 11 factories are awaiting permission to export to Indonesia. Despite Brazil's resources and willingness to trade, a case of bone spongiform encephalopathy (BSE) could affect trade flows. China and the US have suspended trade in Brazilian beef due to an outbreak of mad cow disease.

Beef production in Europe decreased in 2022 by about 1.3% compared to the previous year. As a result, its exports fell by 19% and are likely to remain sluggish in 2023, according to Rabobank.

Mexico, however, is expected to increase production next year. For the past three years, the company has been steadily increasing the number of cows, reaching 50,000 heads per year. Rabobank forecasts a 2% increase in beef production to almost 2.2 million tons. While production is up, beef prices are down. The report notes an 8% drop in the last two months compared to last year.

Tropical Cyclone Gabriel hit New Zealand in mid-February, damaging the country's agriculture, damaging the country's farms and infrastructure, and hitting the stock market. While the North Island and upper South Island have been hit hard, the western and southern parts of the South Island remain dry. Rabobank said a major bank across the country would help support cattle prices. Overall, in 2022 New Zealand beef production decreased by 4% to 26,774 tons.

Cattle prices continued their downward trend in most regions. The notable exception is the US, where tighter inventories provide price support.

A new report by Rabobank suggests that after a landmark year of record high beef exports in 2022, 2023 will bring easing consumer sentiment and lower beef prices.

Source: meatinfo