Beef prices climb as supply contracts in key markets
With production volumes contracting in most major beef-producing regions, global cattle prices have continued to rise across recent months.
Rabobank global strategist animal protein Justin Sherrard says NZ beef production for 2024 is expected to fall around 3% because of ongoing contraction in dairy and beef herds.
"[However] the contraction in the US beef production system should support beef export prices and, in turn, cattle prices," he explains. "While increased Australian volumes will keep prices competitive. We believe a lift in US import demand should see New Zealand cattle prices trade slightly above the five-year average through 2024."
Meanwhile, improving ewe numbers and breeding conditions are expected to lead to higher lamb numbers and an increase in sheepmeat production and exportable lamb volumes in 2024.
While 2023 had seen softer than expected global demand combined with higher Australian volumes, Sherrard believes there will be a gradual improvement in global markets in 2024 with slightly stronger prices, although ongoing large volumes from Australia will still limit upside.
"With forecast beef and lamb production close to the five-year average, New Zealand producers will be looking for an increase in global demand to support livestock prices."
The report says ongoing pressure - particularly environmental - on New Zealand's livestock industries will continue in 2024 and prevent any major production growth.
It also says producers and processors will need to adapt to sustain success amid tight margins. With higher production costs, adverse weather and tighter supplies is expected to push animal protein prices up.
However, a constraint in global consumption may lead to pressure on processors to invest in upgrading production systems to serve emerging market needs, meet regulatory requirements and cater to changing consumer preferences around sustainability.
The report also points to demographic shifts that will see the labour market tighten and raise production costs, while reduced population growth will slow consumption. Production in the major markets is forecast to grow 600,000 tons to a total of 247 million tons next year, compared to a 2.1M ton growth in 2023.
Sherrard says it was a testament to the resilience and flexibility of companies along animal protein supply chains that they continue to grow production and deliver on customers' demands amid such challenging market conditions.
