Australian beef may miss US market

The slower-than-expected rebuild of the Australian cattle herd is ­likely to constrain the country’s ability to fill a looming increase in demand for imported beef in the US.

Rabobank forecast US beef production would fall by 3 per cent in 2023 and by between 2 per cent and 5 per cent by 2026. Picture: Zoe Phillips

The slower-than-expected rebuild of the Australian cattle herd is ­likely to constrain the country’s ability to fill a looming increase in demand for imported beef in the US.

After years of the herd steadily reducing in the US, which is already the world’s second-largest importer of beef, behind China, analysts at agribusiness lender ­Rabobank say the amount of domestically produced beef is likely to decline from next year.

While Australia’s $11.5bn beef export industry has benefited from good seasonal conditions for the past two years, the rebuild to its cattle herd has been slower than expected, meaning Australia will find it difficult to find the extra beef to meet the US shortfall.

“Cow herd liquidation in the US is nothing new,” the report says. “But four years of relatively deep herd culling and minimal heifer retention have done little to reduce beef production.

“We expect the tipping point to be reached in 2023.”

Rabobank forecast US beef production would fall by 3 per cent in 2023 and by between 2 per cent and 5 per cent by 2026.

The US, which has grown its exports by 4 per cent by an average of 4 per cent a year over the past decade, will be unable to meet the shortfall by cutting export volumes.

“Previous periods of decline suggest US retailers and restaurants will look to the global market to fill this void, and US consumers will likely outbid the rest of the world to keep their fill of beef,” the report says.

It will likely lead to a redistribution of trade volumes and increased global beef prices as markets compete for supply.

Rabobank senior animal protein analyst Angus Gidley-Baird said Mexico and Canada would likely pick up some of the slack, but were facing some of their own ­supply limitations.

“Australia and New Zealand, the third and fourth-largest US suppliers, are the logical next options,” Mr Gidley-Baird said.

“But Australia’s recovery from its own beef cattle liquidation phase is being drawn out, with some questions as to whether it will have the cattle available to produce the same volumes it has done in the past.”

After a decade of drought in most cattle-breeding regions, ­Australia’s cattle herd declined to 23.5 million in 2019.

La Nina-induced rainfall in the past two years has enabled producers to restock their paddocks, building the national herd to 27.2 million. But that increase has been slower than expected as producers capitalise on strong prices and beef demand.

“We think producers are taking advantage of good feed availability and high cattle prices to trade cattle rather than build breeding numbers,” Mr Gidley-Baird said. “As a result, we haven’t seen cattle prices ease and slaughter numbers lift, despite more than two and a half years of good seasonal conditions – particularly in the south-east.”