Cattle cycles, weather patterns lead to shifts in global beef trade

The U.S. became a net beef importer during the past year, as drought continued to impact the domestic cattle industry, according to analysts.

Offsetting positions in cattle cycles in the U.S. and the Southern Hemisphere, exaggerated by weather patterns, have caused a redistribution of the global beef trade that will continue in 2024, they said.

The contractionary phase in the U.S. cattle herd, after prolonged herd liquidation due to drought, will cause beef production to decline. This will generate the need for increased imports and decreased exports, according to Rabobank analysts.

If weather conditions in the U.S. improve, the contraction in cattle numbers may be more pronounced, the analysts said in the latest “Global Beef Quarterly Report Report.”

This year will mark the fourth consecutive year of herd liquidation in the U.S. More precipitation would heal depleted pastures and offer cattle producers a reason to slow beef cow culling and start to retain replacement heifers, Lance Zimmerman, a senior animal protein analyst with Rabobank, told Capital Press.

“As that happens, beef supplies tend to pull back even more as those cows and heifers stay on farms and ranches at a higher rate than normal,” he said.

On balance, global beef volumes will remain steady in 2024. Increases in production in countries such as Australia, Brazil and Mexico will offset declines in Canada and the U.S. Aggregate consumption levels are expected to drop by 1% year over year in 2024.

But trade will need to shift, given the differing rates of production and consumption in individual countries, Angus Gidley-Baird, a senior analyst of animal protein with Rabobank, told Capital Press. For example, the U.S. is a large supplier of beef to countries such as Japan, South Korea and China, he said.

With production down, the U.S. became a net importer of beef in 2023. U.S. imports from Australia, Mexico, New Zealand and Brazil are expected to increase this year.

China’s large beef inventories are expected to slowly decline in the fourth quarter of 2023 and early 2024.

In the European Union, regulations on deforestation-free products in 2024 could impact beef import flows. Cattle numbers in the EU declined through 2023, and EU beef production is expected to be 1.5% lower year over year in 2024.