Herd contraction in the world’s four largest beef-producing nations – the US, Brazil, China and Europe – is expected to lead to the first reduction in global beef supply since the Covid-19 pandemic, altering trade flows in the year ahead, Rabobank says in a recently-released research report.
In its latest (Q4) Global Beef Quarterly, titled Navigating declining global production, uncertainty in 2025, the agribusiness banking specialist says Brazil and the US are likely to lead declines in beef production next year.
“Reductions in China, Europe and New Zealand are also likely,” it says, “and Australia may be the only top-10 beef-producing nation to post year-over-year production gains in 2025.”
While North American cattle prices have been high for close to two years as a result of lower cattle numbers and strong consumer demand, the report says, other regions around the world have experienced low cattle prices.
“This trend has started to change as declines in global beef supply start to firm up support for cattle prices in South America, Australia and New Zealand,” it said.
With available supplies altered across the top global beef markets, the report says, beef trade is expected to shift dramatically.
“We anticipate Australian beef producers will increasingly depend on exports to absorb stronger domestic production, while Brazil will see global markets as a better demand opportunity compared to lacklustre domestic demand,” report lead author, RaboResearch senior animal protein analyst Angus Gidley Baird said.
The report says global beef production has the potential to swing dramatically if weather patterns change.
“US producers are waiting on more dependable precipitation to rebuild the herd, and Brazilian production is being slowed by rain delaying the supply of cattle fattened on pasture,” it says.
The report says Australia has maintained relatively adequate rainfall for the past few years, but the threat of dryness could lead to more production (as producers are forced to turn off more stock). Though, Mr Gidley-Baird said, when it comes to weather for 2025, the forecasts suggest a favourable season.
“The latest El Niño Southern Oscillation models are predicting La Niña weather conditions to persist into quarter one 2025, before a transition to a more neutral pattern by midyear,” he said.
“This will support Australian beef production. Furthermore, year-over-year declines in US beef production will remain relatively small, as US cow herd rebuilding remains stalled by slower replacement heifer development.”
Australia
Australia continues to produce and export record volumes of cattle while prices hold, the report says.
Quarter three production volumes for Australia showed a new record for the quarter, Mr Gidley-Baird said, up 17 per cent on the same time last year. “This brings total Australian beef production for the year to date (to September 30) to 1.9 million metric tonnes (mt), also an increase of 17 per cent on the same period last year,” he said.
The report said higher slaughter numbers had been the main contributor to this growth in production – up 19 per cent for the year to date.
Mr Gidley-Baird said the female proportion of total slaughter numbers remained above 50 per cent.
“This would normally indicate liquidation of the herd. However, RaboResearch believes this higher proportion reflects the high number of cattle in the systems and the reduced need for replacement cattle,” he said.
The higher beef production volumes have led to Australia setting new monthly export records, the report said.
“In October, a new record of 130,000 mt shipped weight was exported, surpassing the previous record set in July,” it said.
Mr Gidley-Baird said the US was taking a large chunk of these exports, with 29 per cent of total volumes heading there in the first 10 months of the year.
High export volumes could see safeguard-measure thresholds potentially exceeded under various trade agreements – in particular South Korea, China and the US – triggering additional tariffs, he said. However, these would reset at the beginning of 2025.
Despite the record production volumes, Australian cattle prices have been holding steady, the report said.
Mr Gidley-Baird said heavy steers had been trading between AUD 3-AUD 3.50/kilogram lwt (live weight) from late October onwards, with weaner cattle trading at around the same level.
Cattle prices softened slightly in mid-November, he said, potentially reflecting an easing back in demand from processors with exports approaching safeguard thresholds. “However, with safeguards resetting at the beginning of next year and declining cattle volumes from Brazil and the US, RaboResearch believes prices should hold into the new year,” he said.
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