Why less beef in the US may not mean more demand for Australia

A declining US beef herd could see a shortage for its own domestic consumption, but it may not mean more demand for Australian beef.

Declining beef production in the United States will not necessarily translate into extra demand for Australian product, new analysis has revealed.

The US is already the world’s second-biggest importer of beef and declining local production there is now expected to leave a shortfall for domestic consumption.

While Australia is the third-biggest supplier of beef to the US, the hunger for beef may not result in extra exports.

“While (US) neighbours Mexico and Canada, which are the two largest suppliers of beef to the US – are likely to take up some slack, Canada is going through its own cattle herd liquidation phase and likely limited to what it can supply,” Rabobank senior animal protein analyst Angus Gidley-Baird said.

The Rabobank report expected the decline in US beef production would not be met by production growth in major exporting countries.

Rabobank senior animal proteins analyst Angus Gidley-Baird. Picture: Supplied

“Given the supply pressures in many markets, this means global beef importers – and consumers – will need to pay more to compete for available supply,” Mr Gidley-Baird said.

“And this could create a strong upside to prices and a redistribution of trade volumes in coming years.”

And there could be even bigger shortages if global beef demand grew from other customers, the report said.

Balanced against the positive news are high inflation and waning consumer confidence, which could soften demand.

“The central question is whether beef markets are shaped more by demand-side or supply-side pressures as we head into 2023,” Mr Gidley-Baird said.

“Local beef prices are expected to hold as we approach the end of the year, with a likely dip in the new year as cattle volumes increase and summer pasture growth starts to dry off.”

The outlook comes as cattle slaughter begins to climb, according to figures released by the Australian Bureau of Statistics.

The number of cattle slaughtered in the September quarter rose 1.9 per cent to 1.5 million.