The beef market globally had a stronger first half-year than expected, as stated by Rabobank in its most recent report on the world market. The bank expects global production to decrease in the fourth quarter. Production is expected to decrease especially in the United States, but there is also a clear decline in Brazil.
Rabobank expects production to decrease by 4% in the fourth quarter of 2024. European production will decrease by 1% compared to the fourth quarter of 2023. Meanwhile, production in Brazil is expected to decrease by 3% and the US will produce 5% less beef. The strongest decrease is expected in New Zealand, where production is expected to decrease by 7%. However, Australia is expected to produce slightly more than the previous year.
However, the report is not all negative. The bank emphasizes that global production still remains above the ten-year average, and this applies to almost all individual markets. Only the United States is producing at a lower level. Due to the lower production levels, the bank expects prices to remain roughly stable.
Higher European production
According to Rabobank, European beef production increased by 5% between January and May compared to the same period last year. Poland clearly leads this increase. The Eastern European country saw production increase by a remarkable 20% compared to the previous year. Italy follows next. The production of the Southern European country increased by 12%. Meanwhile, beef production in Spain increased by 6.8% and Germany saw a growth of 4.6%. Production in the Netherlands increased by 3.6% and in Ireland, production increased by 3.3%.
Overall, the European market is in a good position according to Rabobank. Additionally, the carcass price in week 31 of 2024 was 6% higher than in the same week of 2023. Part of this increase is said to be symptomatic of the strong prices this year, but the report also mentions that the usual seasonal decline has not yet occurred. The bank also expects prices to remain stable in Europe. Despite the high prices due to international scarcity, the high prices do not hinder the EU from exporting. The exports of the European Union and the United Kingdom increased by 41% in the first five months of 2024. The majority of the increase is attributed to stronger demand from Turkey and the Middle East. Meanwhile, beef imports to the European Union decreased by 1%.
United States facing challenges
Meanwhile, the slaughter rate in the United States decreased by 3% in the first half of 2024 compared to the same period in 2023. It is noteworthy that the production of beef cattle has decreased even more significantly. In total, beef cattle production decreased by 17%. This decline is due to drought conditions affecting a significant portion of the sector. Overall, 13% of all American cattle are raised in drought areas. As a result, there is insufficient grass growth in these regions to sustain the normal size of the cattle herd.
The recovery is likely to be slow. According to Rabobank, the weak performance of the American stock market makes it difficult to rebuild the cattle herd. The S&P 500 has decreased by 9%, and the Rabobank states that this also affects the cattle futures market. Despite the lower slaughter rate, the value of futures contracts has decreased by 8%. Meanwhile, consumer prices are high. The price recently reached a record high of $17.97 per kilogram. Exports decreased by 5% in the first half of the year.
Brazilian production reaching its peak
According to Rabobank, beef production in Brazil is currently at a peak level. In the second quarter, production reached its highest level ever. Compared to the second quarter of 2023, production increased by 17%. The increase was even higher in the first quarter. During that period, 19% more beef was produced than in the same period the previous year. This put Brazil in an exceptionally strong export position. The South American country clearly benefits from the challenging American market and set a new export record in July. In total, the country exported 266,000 tons of beef. The bank attributes the export boost to a significant devaluation of the real. The currency's value decreased by 8% against the dollar in May and June. However, the bank notes that the country's export seems to have peaked. The bank observes that the cattle herd decreased in the third quarter of 2024, making this level unsustainable. The bank expects production to increase by 10% over the whole of 2024.
