Analysis: Beef manufacturing to say no in Europe in 2023

The worldwide beef market stays strong, in accordance with the newest beef report by Rabobank. Nonetheless, rising financial and supply-side pressures might change that.

International manufacturing within the first three months (Q1) of 2023 is anticipated to stay just like the degrees a yr in the past, however the market ought to control the US, which is headed towards a downward manufacturing cycle that can influence costs and commerce distribution within the coming years, in accordance with the analysis.

Rabobank signifies that cattle costs are typically beneficial, supported by optimistic seasonal circumstances and resilient client demand. However given the slowing financial backdrop – with excessive inflation and waning client confidence – demand might but soften.

Rabobank beef report

Angus Gidley-Baird, senior analyst – animal protein at Rabobank said: “We additionally see rising supply-side dynamics that can affect markets.

“The central query is whether or not beef markets are formed extra by demand-side or supply-side pressures as we head into 2023.”

International beef manufacturing is cut up by hemisphere, with northern international locations typically in a declining manufacturing part whereas these within the south are growing.

Into Q1 2023, manufacturing in Europe and the US is anticipated to say no, whereas manufacturing in Australia, Brazil, and China ought to be flat or enhance.

New Zealand exhibits a year-on-year manufacturing decline for This fall 2022, however rising manufacturing for Q1 2023. General, complete manufacturing volumes for key markets in This fall 2022 and Q1 2023 will doubtless be just like ranges a yr in the past, in accordance with Rabobank.

A strengthening US greenback (USD) noticed most cattle costs in USD phrases contract. However in native forex phrases, rises had been recorded in Australia (8%) and New Zealand (5%), whereas Brazil (-7%), Argentina (-4%), and Uruguay (-7%) had been down.

The five-area steer value within the US was regular.

Decline in US manufacturing to affect market

In keeping with Gidley-Baird, US beef manufacturing will start a four-year decline beginning subsequent yr.

US manufacturing ought to fall by 3% in 2023, with extra annual declines of two% to five% attainable into 2026. That’s the potential lack of 400,000 to 500,000 metric tonnes of beef manufacturing yearly.

Earlier intervals of decline recommend US retailers and eating places will look to the worldwide market to fill this void, and US shoppers will doubtless outbid the remainder of the world to maintain their fill of beef.

However different markets are unlikely to fill the hole, due native liquidation (Canada, Australia), structural herd declines (Europe), and commerce insurance policies (South America), in accordance with the analysis.

The web outcome, in accordance with Gidley-Baird: “We count on the decline in US beef manufacturing won’t be met by manufacturing progress in different main exporting international locations.

“Shoppers might want to pay to entry obtainable provide, given the provision pressures in lots of markets. This might create a powerful upside to costs and the redistribution of commerce volumes,” he added.