SLOWING global economies, and the real possibility of recession in some, may not have an overly dramatic impact on Australian beef and cattle prices.
However, the behind-the-scenes shifts that flow as a result may drive change for both producers and others in the supply chain.
The rise of different cuts and the need to position products in different channels might be an example.
This from Angus Gidley Baird, Rabobank senior animal protein analyst, who spoke at the Australian Brahman Breeders' Association conference held in Brisbane last week.
On top of the already-high retail beef prices consumers have been paying on the back of greater demand during the pandemic, households both here and overseas will very soon need to accommodate rising costs of production in supply chains, he explained.
Fuel and freight prices, particularly refrigerated containers, have gone through the roof and labour and energy are also at record levels.
"We don't believe all the rising input costs have been pushed through the system yet," Mr Gidley-Baird said.
"A lot of operators in the beef supply chain have been wearing rising costs in the form of reduced margins because they know there is a price sensitivity at consumer end."
Changes in consumption patterns will have to come with even more upward movement in beef retail prices, but it won't necessarily mean cattle prices are driven down.
"Overall, there is still a very positive outlook - historically very good cattle prices will remain in Australia over the next few years," Mr Gidley-Baird said.
Meat drives inflation
Global inflation levels have taken off during the past 12 months and will continue to be a problem, according to Rabobank forecasts.
"Most central banks aim to operate within two to three per cent inflation. The United States is now at 9.2pc, Brazil 11pc and Australia's at 6.2pc for quarter two this year with expected rises to continue throughout the year," Mr Gidley-Baird said.
"What's interesting is Indonesia and Vietnam are at 4 and 3pc respectively, so it is potentially developed countries driving price increases."
Much of the inflation pressure is coming from strong consumer demand clashing with limited supply capacity, which has certainly been the case for Australian beef.
"The impacts of COVID and not being able to travel or eat out has meant people have looked to spend their income on something else," Mr Gidley-Baird said.
"In many cases, that has been accompanied by government fiscal strategy boosting incomes. In the US, personal income levels actually rose in 2020.
"If you break that inflation down, you see food in general has been a driver and meat a very big driver."
Rabobank data shows meat prices have gone up 16pc in the past three years; fruit and vegetables 16.5pc and bread and dairy 10pc.
On an individual protein basis, beef has jumped 33pc in the past three years, chicken 6pc, lamb 14pc and pork 13pc.
"From a producer's point of view, high retail prices are generally good - it means more money is coming back to the farmgate," Mr Gidley-Baird said.
"But we have to bear in mind what it means for the relationship between our product and the alternatives available.
"Are we going to see the consumer move away from a protein group or stay within a class but buy less expensive cuts?
"Are there consumers in different countries more sensitive to these price shifts? Is Australian beef now too expensive for some?"
Central banks have taken massive steps of late to try to get inflation pressure under control.
The US Federal Reserve took a 75 point rise in July for the second time in two months. The European Central Bank raised rates by 50 points in its first rate rise in 11 years.
"We are still at historically low interest rates but they are going up quickly," Mr Gidley-Baird said.
"And questions are now coming around chasing inflation and managing economies. Continually jacking up interest rates will potentially push economies into recession."
Most analysts are forecasting further rate rises, especially in the US.
"So we are looking at a slower global economy," Mr Gidley-Baird said.
"And bubbling away in the background is the ongoing challenge with the Russia-Ukraine war. which could potentially kick off a whole new US/China trade war that will have implications for Australia."
Signs are there, however, that Australian beef may be shielded to a degree from the slowing economic situation.
European data was showing the consumer spend on mince and burgers was actually increasing but the spend on steaks and roasts was declining, Mr Gidley-Baird said.
"Australians are established in their eating habits. Our diets are such that the consumer doesn't switch in and out (of a protein category) a lot," he said.
"The same amount of beef is still likely to be purchased, although people may change the cuts they buy."