Wholesale beef prices under pressure: Rabobank

Rabobank's latest global beef quarterly report makes note the dip is happening even though production costs are higher.

It says cattle prices, along with other costs being incurred past the farmgate, will need to come down in order to keep beef competitive on retail shelves.

Rabobank's senior animal protein analyst Angus Gidley-Baird said ongoing adjustments of consumption and margins in all markets were expected heading into quarter three of 2022.

Rabobank reported cattle prices across the seven major beef exporting countries remained strong through quarter one.

Low inventory and favorable seasons in Australia continue to support cattle prices, while firm consumer demand supports United States prices despite their higher-than-expected production and cattle-on-feed numbers on the back of dry conditions.

In Brazil, increasing demand from export markets has added to the appreciation of live cattle prices.

In Europe, beef carcass prices have remained strong all year, at one point in the past quarter being up 35 per cent year-on-year, Rabobank data shows. Continued limited supply will support prices in the coming months, the bank's analysts said.

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At the same time, demand has taken a hit in major beef-buying nations. Lockdowns of Chinese cities has restricted food service sales, while e-commerce sales have also contracted due to the lack of delivery drivers.

"As a result, Chinese beef imports dropped in quarter one, and we expect them to be down in the second quarter," Mr Gidley-Baird said.

On home soil, Rabobank says high food inflation and the continuing fragility of consumer purchasing power will challenge beef demand this year.

The report does, however, point to beef becoming more competitive against chicken and pork, which have registered increases since February and March.

Meat & Livestock Australia's latest cattle industry outlook, released on Friday, said all proteins saw a decline in volume sales in the first quarter versus the same time last year due to decreased household purchasing.

Beef and chicken saw the largest declines. However, beef was the only protein to see marginal growth in dollar sales - it was up 1.3pc, according to Nielsen Homescan data.

Beef mince and sausages remain the two most popular beef cuts sold, accounting for more than half of retail sales, MLA reported.

"In this latest quarter, these two cuts have made the greatest contribution to volume decline but continue to make the greatest contribution to dollar growth for beef," the outlook report said.

"Scotch fillet and corned/silverside beef saw the largest value declines this quarter."

Sydney butcher Adam Stratton, who has four shops trading under Tender Gourmet Butchery, said mince and sausages were entrenched in the diets of Australians and would remain the backbone of business for beef.

"Through the lockdowns, people flocked to these products, along with chicken breast, and while that frantic buying has eased now, they are still the best sellers," he said.

"It's not just the value and versatility, it's the fact the meals they make - spag bol, cottage pie, rissoles, tacos, lasagne - are so much a part of life in Australia.

"Mince is something Australians will always want to have in their freezer."

Mr Stratton said in the high-end steak department, consumers were still keen but were 'cutting their grammage' to accommodate their budget.

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