According to a recent Rabobank report, the global beef market is expected to tighten in 2022, putting more pressure on markets that are experiencing high demand. And the contraction of beef production in the United States, which is one of the world’s largest beef importers and exporters, is a key factor.

The depopulation of American cattle has accelerated this year due to poor economic conditions and the end of the drought in the western United States.

Beef and dairy cow slaughter increased 6%, which will lead to a 2.5% drop in U.S. beef production in 2022, according to the report.

Although production is contracting and domestic demand is strong, the United States has moved from being a net importer to a net exporter.

U.S. beef exports are forecast to increase 2-4% in 2022.

“Markets in Japan, South Korea, Mexico and Canada remain strong, but growth in exports to China is driving export volume to increase,” said Angus Gidley-Baird, senior animal protein analyst at Rabobank.

“China has become the third largest export destination for the United States and export volumes continue to increase,” he added.

U.S. imports will increase

Continued strength in US domestic demand, along with the expected contraction in production, presents an opportunity for beef imports to increase, according to the report.

However, the expected high cow slaughter will temper imports of lean-made beef, which will also be constrained given reduced supplies from two of the largest suppliers of lean trimmings: Australia and New Zealand, which have dropped in volumes in 2021.

Imports from Brazil have increased by 61% in the first nine months of 2021 and, although volumes of lean trimmings from that country are expected to increase, they will be limited by the tariff quota.

In addition, lingering concerns about an atypical bovine spongiform encephalopathy (BSE) case in August could affect imports from Brazil.

Global implications

According to Rabobank, the expansion of US exports to China is expected to continue, as it meets China’s growing demand for better quality beef.

To date, the United States has been able to maintain its exports to other markets, but with high domestic beef prices in the United States, shrinking beef production, and growth in the Chinese market, the competition for US beef is expected to remain strong and keep prices firm. .

Other beef exporting countries, such as Mexico, may be able to gain market share in some markets with cheaper product offerings.

The increase in cow slaughter in the United States is offsetting lower import volumes of lean trimmings.

As this continues, it will ease some of the supply pressures in the market. However, the surge in volumes imported from Brazil is a testament to the need for the United States to fill the void left by Australia and New Zealand.

What to expect to move forward

With the slaughter of cows in the United States expected to continue and the decline in production not expected to reverse until 2023, or beyond, as well as limited export supplies from Australia, World beef markets appear to be on a tightening trend.