The agribusiness banking specialist said contracting production in the US — one of the world’s most influential markets as a major producer, consumer, importer and exporter of beef — would alter global trade flows and have implications for other “trade exposed beef nations”, including Australia.
The report said while US beef production was forecast to be down 2.5 per cent in 2022 — with increased cow slaughter due to continuing concerns about drought and the availability and price of feed — US beef exports are still expected to remain strong.
The contraction in the size of the US cattle herd had accelerated in 2021, the report said, “due to poor economics and drought liquidation across the western US”.
For the year to date, US beef cow slaughter has been up 10 per cent and dairy cow slaughter up two per cent, for a combined increase of six per cent.
But, despite contracting production — and strong domestic consumer demand — the US has moved from being a net importer to a net exporter of beef, the report said.
And US beef exports were forecast to increase by between two and four per cent in 2022, report co-author Angus Gidley-Baird said.
“Markets in Japan, South Korea, Mexico and Canada continue to remain for US beef, but it is the growth in exports to China that is driving the rising US export volumes, with China now the third largest export destination for the United States,” he said.
US beef exports to China rose to 29,000 metric tons in September, up from 19,000 metric tons in March. Australian beef exports to China in September came in at 12,345 metric tons (swt).
Australian outlook
For Australia, the Q4 Beef Quarterly report said, forecasts for favourable seasonal conditions in the coming months would support strength in producer demand and provide support for young cattle prices.
“However, with the US, South Korea and Japanese import prices not showing the same increase through September and October as we saw in earlier months, finished cattle prices may see a cap on further increases,” Mr Gidley-Baird said.
The report notes that post-drought herd rebuilding efforts in Australia remain sluggish — limiting export opportunities — with east coast weekly slaughter numbers for the four weeks to the end of October down 24 per cent on the five-year average, with female slaughter numbers a relatively high proportion of the total.
Australian beef export volumes are down 16 per cent year-to-date to October, although Mr Gidley-Baird said the month-on-month contraction rate was beginning to lessen.
“The US market has seen the largest decrease, down 38 per cent year-to-date, which reflects the lower production of lean trimmings due to reduced cow slaughter numbers, while volumes to China are down 28 per cent and volumes to Japan are down 11 per cent,” he said.