Rabobank: Global beef demand to remain stable in 2024 despite challenges

In most markets, retail beef prices have increased since 2019, and the impact of inflation in 2022 and 2023 has increased the cost of living, putting pressure on consumer budgets and changing consumption patterns.

As consumers shift to lower-cost options in 2023, food service and retail companies have increasingly promoted value-based offerings, some of which have exceeded expectations.

Angus Gidley-Baird, senior analyst at Rabobank, said: "Although there has been some channel shifting and a move towards cheaper options for beef, overall demand has held up relatively well in 2023, supporting consumption levels."

However, a new Rabobank report released today (February 28) expects global GDP growth to slow and unemployment to rise in many countries in 2024 .

Rising unemployment implies that upward pressure on wages should ease, and if inflation remains high, real wages should fall, putting further pressure on household income.

Gidley-Baird says: "Questions about economic productivity, income levels, costs and the direction of monetary policy remain unanswered, but we expect overall beef demand to remain strong into 2024 and therefore consumption levels to remain stable."

Despite economic fluctuations, the latest agribusiness report maintains a neutral outlook for global beef production, with increases in Australia and Brazil offsetting declines in Europe and the US .

“Without strong demand pulling volume through the supply chain and driving up prices, price setting reverts to producers, and with it the impact of seasonal conditions and producer sentiment increases,” explains Gidley-Baird.

The strength of the economic outlook in the various beef consumption markets creates an interesting addition to the global beef market situation and trade balance.

"With expected limited or negative real wage growth in 2024, coupled with a higher cost environment, we believe global beef demand will remain stable at best and possibly decline in 2024, with some significant regional variations," says Gidley-Baird.

For supply chain participants, this raises important questions about margins and trading. Can prices be maintained or increased to compensate for lost consumption, or should retail prices be reduced to encourage increased consumption?

In a market where beef production growth is limited - such as the US - consumers may be willing to tolerate higher prices at the expense of consumption, i.e. maintaining demand.

On the other hand, in a market with increasing supply - such as Australia - lower prices may be required to stimulate consumption.

China's import demand should remain weak in 2024 - at least for the first half of the year - and with demand strengthening and domestic inventories falling in the US market, the beef trade will refocus.

"Brazil's exports to the US in January 2024 exceeded 2023, and volumes from Australia were up 127% y/y. If China's recovery exceeds expectations, global beef markets could become quite tight, pushing prices higher," Gidley-Baird said.

With its reasonable economic outlook and low domestic inventories, the US is likely to lead the beef pricing market and attract increased volumes from Australia, New Zealand, Brazil, CANADA and Mexico.

"But value will become a dominant theme in most markets to retain consumers facing tougher economic conditions," Gidley-Baird explains.