RaboBank analyzes quarter four and early 2023 beef industry projections

With a new year peeking right around the corner, RaboBank’s food and agriculture research team released a report analyzing beef industry projections for the remainder of quarter four (Q4) and the beginning of 2023.

“The central question is whether beef markets are shaped more by the demand side or the supply side pressures as we head into 2023,” reads the report. 

U.S. beef consumption

According to RaboBank’s report, meat case prices at retailers and restaurants in the U.S. have remained high over the past year, with retail beef prices peaking in October at a record-high of $7.55 per pound because of supply disruptions.

The report points out retail values have remained within 15 to 30 cents of those high prices ever since, while wholesale beef prices have fallen more than 60 cents in the same time frame.

“End users are maintaining a risk premium in the market – anticipating tighter beef supplies and higher prices,” reads the report.

Despite this, RaboBank notes consumers have continued to push back, resulting in fairly manageable beef prices throughout the past thee quarters, and they are expected to continue eating as much beef as they can afford. 

“Therefore, household incomes will be a critical factor moving forward,” the report states.

U.S. cowherd

When it comes to the U.S. cowherd, RaboBank notes liquidation is a very familiar concept. In fact, U.S. cowherd liquidation has gone on for several years and remained aggressive throughout 2022 – up 11.6 percent year-to-date. However, despite deep herd culling and minimal heifer retention, beef herd production across the states hasn’t seen significant reductions. 

RaboBank anticipates this reduction will peak in 2023 with U.S. beef production falling by three percent, then continual annual declines of two percent and five percent into 2026. 

Additionally, according to the report, U.S. heifer slaughter was up 4.9 percent through September, amounting to 9,000 head, while steer and heifer slaughter was up 3,500 head over the same timeframe.

RaboBank notes, they expect U.S. cow and heifer slaughter to finish 2022 at its highest level since 2000 at 17.6 million head.

“Without additional heifers, fed cattle slaughter would be down year-over-year. Considerable supply gains have come by eliminating young herd replacements from U.S. cow/calf operations this year,” states the report.

Although current beef supply in the U.S. can be considered adequate today, RaboBank notes buyers are concerned about future declines, including a potential 400,000 to 500,000 metric ton annual loss in production, which brings up the question of if any countries will be able to meet U.S. consumers appetite for beef.

With this said, RaboBank predicts production growth in other major exporting countries won’t fill the gap from the decline in U.S. beef production, and this is without considering any other increases in global beef demand over the same period of time.

Global beef production 

According to the report, neighboring countries Mexico and Canada, are the two largest suppliers of imported beef for the U.S., and while RaboBank predicts they will likely pick up some slack, it is also noted Canada is currently facing it’s own liquidation phase as well. 

Australia and New Zealand, the third and fourth largest suppliers of imported beef to the U.S., respectively, are the next logical options. However, as Australia recovers from it’s own aggressive liquidation, RaboBank questions if they will have cattle available to produce the same volume they have in the past. 

New Zealand’s production is also forecasted to be limited, with a decline of four percent between 2023 and 2025, according to the report. 

Europe is not currently a large supplier of beef to the U.S., but they are also expected to experience beef production declines at an annual rate of 0.5 percent from 2023 to 2025, notes RaboBank. Additionally, South America has available volume but lacks the trade access needed to fill the sizable gap in U.S. production.

Hannah Bugas is the managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.