Global beef production is expected to contract in the second half of 2024, providing support to global prices, according to a report by agribusiness banking specialist Rabobank.

In its recently-released Global Beef Quarterly Q2 2024, the bank says global beef production for quarter two is forecast to be marginally higher than in the same quarter last year, but volumes for quarters three and four are expected to fall year-on-year (YOY).

Rabobank says more beef is expected to be produced in Australia and Brazil in the second half of this year, however these increases are likely to be outweighed by production contractions in Europe, the US and China.

“Contractions in beef production in Europe and the US are expected to be too big for the increases forecast in Australia and Brazil to offset. And China’s production is set to increase in the second quarter before contracting later in the year,” report lead author, RaboResearch senior animal protein analyst Angus Gidley-Baird said.

Looking at global pricing, Mr Gidley-Baird said, a two-speed cattle market continues to exist with the North America tracking close to record highs – amid the contraction in local production – while other regions remained more subdued.

“Europe finds itself in the middle ground, despite a recent uptick in production,” he said.

The report said these regional disparities were beginning to influence international trade flows, with the US ramping up its import volumes and major Asian markets maintaining steady import levels.

Gidley-Baird said the contraction in US beef production was starting to flow through to Australian beef markets. “Australian export volumes to the US were up 117% in April and year-to-date volumes to the US are up 89%,” he said. Meanwhile export volumes to other major markets are not showing the same increase.

“The contraction in US production – particularly the reduction in cull cow and bull slaughter – provides opportunities for Australian lean trimmings export volumes,” Gidley-Baird said. “It also provides opportunities for Australian volumes into key Asian markets where the US is a comparable supplier to Australia.”

Animal disease ever-present risk

The report said the bank continued to closely monitor animal disease risks in different locations around the world, due to the potential impact on the global beef sector.

Gidley-Baird said the recent transmission of H5N1 avian influenza to dairy cattle in the US was one such issue, although no cases had been reported in beef herds and beef food safety remained uncompromised.

“Meanwhile Brazil recently declared itself free from food-and-mouth disease without vaccination. Official recognition by world animal health authorities could significantly enhance Brazil’s trade prospects,” he said.

Climate disclosure

The Rabobank Beef Quarterly said the growing demand for climate disclosures around the world was also edging into beef supply chains, presenting both opportunities and challenges.

The report said beef companies around the world were facing a “balancing act” as they looked to proactively respond to new sustainability requirements and capitalise on associated opportunities, while also managing the risk of moving too early in a market and regulatory environment that is rapidly evolving.

Gidley-Baird said the beef industry was facing a particular challenge, with its ‘scope 3’ emissions, which were substantial, yet difficult to measure.

“Scope 3 supply chain emissions represent a significant portion of food retailers’ greenhouse gas emissions. Under the reporting regulations, large beef companies will be required to navigate the complexities of collecting and reporting accurate emissions data,” he said.

“At farm level, carbon calculators and measurement tools will become important to facilitate a bottom-up approach to measurement.”