A monthly column written for Beef Central by US meat and livestock industry commentator, Steve Kay, publisher of US Cattle Buyers Weekly
“WHERE’S the beef?” – a slogan coined by giant US hamburger chain Wendy’s, is one of the most successful ad campaigns of the past few decades.
But in light of a big decline in US beef production next year, global beef users might be asking the same question about US beef.
US production is expected to decline to 12.017 million tonnes, down just over six percent from the expected 2002 total of 12.82mt.
Drought conditions in much of the US in 2022 have resulted in high culling rates and earlier-than-normal placement of cattle in feedlots, says USDA’s Foreign Agricultural Service. This will result in a smaller cattle herd in 2023.
Another USDA agency says that as of November 1, 76pc of the US cattle inventory continued to be mired in varying degrees of drought.
Through the latest reporting period, weekly cow harvest is averaging 7060 head above year ago levels. Beef cow liquidation accounts for the entire increase in cow harvest year-to-date, say analysts.
FAS forecasts that US exports will be 14pc lower than 2022’s record volume. Tighter cattle supplies and potential heifer herd retention will be reflected in lower beef production, thus constraining exportable supplies.
Nevertheless, US exports are expected to remain historically elevated on firm demand in key market, said FAS. Global buyers, it seems, will have to turn to using more Brazilian beef, although it is of a very different quality to US beef.
Global beef production in 2023 is forecast fractionally lower as falling North America and EU production offsets gains in Brazil, China, and Australia, says FAS.
Brazilian production is expected to increase 1pc to 10.45mt based on firm global demand in key markets, although higher input costs and a weak domestic market will constrain growth.
In China, higher cattle inventories are anticipated to support a 5pc increase in beef production. Meanwhile, Australian production is expected to surge 13pc to 2.21mt on continued strong pasture conditions, says FAS.
Global exports in 2023 are forecast down 1pc due to lower import demand, particularly in China, says FAS.
Nevertheless, lower total exports from North America and India are expected to benefit Australia and Brazil.
Reduced North America competition in East Asia and rebounding Australian production will allow Australia to boost its shipments and increase market share.
Meanwhile, Brazil exports are forecast to be record high as aggregate exports from its main competitors (Argentina, Paraguay, Uruguay, and India) are expected to fall 3pc. Smaller cattle inventories are expected to weigh on the exportable supplies of Argentina, Paraguay, and Uruguay.
As for India, exports are expected to be unchanged from 2022, with limited growth to a number of markets, says FAS.
Brazil’s beef exports in 2023 are forecast up about 1pc. It will maintain its position as top exporter, accounting for about 25pc of beef exports by major world traders. China is expected to remain Brazil’s largest market despite lower total beef imports due to increased domestic supplies.
Argentina and Uruguay, Brazil’s main competitors in China, will have tighter supplies of cattle, limiting their exportable supplies. Furthermore, Brazil exports only frozen boneless beef to China and at more competitive prices than New Zealand and Australia, making its shipments more attractive amid the economic slowdown.
In addition to China, Brazil shipments to Middle East and Southeast Asia markets are expected to climb as India’s exports are expected to be stagnant, says FAS.
Export value closing in on 2021 record
Meanwhile, latest export data reveals that US beef exports in September declined year-on-year in value and volume, while Australian exports in October again performed poorly.
The value of US beef exports in September slid below year ago levels and below US$1 billion for only the second month this year. Exports totaled 115,487t, valued at US$890.3m, down 7pc from a year ago in both volume and value.
But for the first nine months of 2022, beef exports were still 4pc above last year at 1.12mt. Export value reached US$9.12b, up 20pc and already achieving the second highest total for any calendar year, trailing only the 2021 record of US$10.58b.
Australian beef exports continued to perform poorly in October, reaching just 72,979 mt, as Beef Central reported on November 7. Although the volume represented a small rise on September trade, up 3.8pc, it was coming off a particularly low base, as September beef production struggled under weather challenges and other burdens. October exports were down 2pc from October last year, which by that point was already being heavily impacted by short cattle supply.
For the year to the end of October, Australian beef exports reached 708,778t, down 3.7pc on the same period last year, said Beef Central. Barring a miraculous turnaround in the last two months of the year, which seems unlikely, full-year Australian exports for 2022 may struggle to reach 850,000t. That will come on top of a 36-year record low export volume last calendar year of 887,679 mt, it said.
But according to FAS, Australian exports will start to rebound next year.