Beef markets around the world - other than the United States - are seeing softer consumer demand, with global cattle prices now split into two distinct groups: those in North America and Europe, and those in the rest of the world, Rabobank says in its just-released global beef quarterly.
The report says declining supply and strong consumer demand in the US is driving cattle prices higher, while lower domestic beef supply has also held up prices in Canada and Europe.
In most other regions, however, the opposite - increased supply and lower demand - is making prices softer.
Report lead author, Rabobank senior animal protein analyst Angus Gidley-Baird said US cattle prices have increased almost 30 per cent over the past 12 months, while Australian cattle prices have dropped by more than 30pc.
"This price spread is the largest we have seen in the past 10 years," he said.
"Such a separation in prices will have consequences for beef exporters' competitiveness, and we expect to see some shift in trade volumes as a result."
A consistent theme across most markets, other than the US, is softer consumer demand and full supply chains.
In a number of regions, particularly in Asian countries, beef purchases made through 2022 and into 2023 in anticipation of recovery from COVID have not been consumed, the report says. These are now part of growing stock levels that also include other proteins.
"Softer consumer demand is making it harder to move these volumes through the system," Mr Gidley-Baird said.
Australia
After falling for most of the year, Australian cattle prices had levelled out in mid-June, the report said.
Mr Gidley-Baird said the market had seen heavy steer prices rise towards the end of July before dropping again. Meanwhile national saleyard restocker steers have drifted down slightly in August. The Eastern Young Cattle Indicator was down 45pc year-on-year for the month of August to average 540 cents a kilogram.
Through May and June, prices had eased on producer concern about the seasonal outlook, which added additional cattle to the market, he said.
"At the same time, producer buying activity dropped as cattle numbers were building, processing capacity remains constrained and consumer markets are still soft. This saw prices fall to their lowest levels in five years through July. But with some rain through cattle-producing areas in July, stability returned to the market," Mr Gidley-Baird said.
Weekly national slaughter volumes for the year to date are up, with the increased cattle inventory flowing through to finished cattle numbers.
"Processors remain constrained as they balance the decision to increase shifts with available cattle numbers and demand in end markets. As such, weekly cattle slaughter has been range-bound at around 120,000 per week. Our expectations are that when supply chains start to clear and product starts to move more freely, given the additional cattle numbers on the ground, we will see processing capacity lift and Australian production take another step up," Mr Gidley-Baird said.
Export volumes rise
Export data for July shows Australia beef export volumes were up 30pc year-on-year.
However, Mr Gidley-Baird said markets were mixed, with congestion generally limiting volumes to Asian markets, such as Japan, while strong demand in the US and an increase in Australian cow slaughter was seeing stronger volumes exported to the US - up 103pc for July.
"Australian live cattle exports are down 17pc for the year to July, but we see this more as a reflection of lower Australian cattle numbers in northern Australia where the rebuild has been slower," he said.
