With limited or negative real wages growth expected in 2024, coupled with the higher cost environment, Rabobank expects global beef consumption will at best remain steady and possibly decline through 2024, with some notable regional variations.
In its recently-released Q1 Global Beef Quarterly report, the agribusiness banking specialist said beef was generally considered a premium protein with a high price point - even though a large part of the carcase was sold as ground beef, a lower price point commodity.
The report said this situation posed important questions for those in the supply chain around margins and trade.
"Can prices be maintained or pushed higher to make up for the loss of consumption or do retail prices have to ease to encourage higher consumption," the report read.
The bank said in a market where beef production growth was limited, such as the United States, the consumer may be willing to tolerate higher prices at the expense of some consumption, therefore maintaining demand.
"On the other hand, in a market with growing supply - such as Australia - lower prices may be needed to encourage consumption," the report said.
Report author and Rabobank senior animal proteins analyst Angus Gidley-Baird said these supply and demand dynamics may swing beef trade flows towards the US.
Mr Gidley-Baird expected Chinese import demand for beef to remain sluggish in 2024, at least in the first half.
With strong import demand though in the US, along with lower domestic supplies, beef trade was already being diverted to the US.
"Brazil's exports to the US in January 2024 were ahead of 2023 and Australian volumes to the US were up 127 per cent year-on-year," he said.
"So if China's recovery is better than expected, global beef markets could become quite tight, fuelling price rises."
The Rabobank Global Beef Quarterly said although the prospects of increasing global beef demand may not be strong in the year ahead, the bank retained a positive outlook on the market.
"With US production declining and the country's economic outlook being reasonable, the US is likely to lead the beef price-setting market," Mr Gidley-Baird said.
"This is likely to draw increased volumes from Australia, New Zealand and Brazil, along with trade from Canada and Mexico."
Meanwhile, Mr Gidley-Baird said the Australian cattle market was still resting in producers' hands.
"With increasing cattle inventory levels and weak consumer demand - except in the US market - Australian cattle prices remain heavily reliant on producer sentiment and marketing activity," he said.
The Rabobank report said in Australia, large and increasing volumes of cattle in the system mean buyers have plenty of choice and, while consumer markets were weak, there was no need for processors to chase cattle.
"The dry conditions and pessimistic producer sentiment in 2023 saw cattle prices drop 40 to 50 per cent in the first 10 months of the year," Mr Gidley-Baird said.
"Since rain in November and again in January this year, producer sentiment has turned around and prices have lifted by more than 50pc since October and are close to where they were at the same time in 2023."
