IndexBox has just published a new report: ‘U.S. – Beef (Cattle Meat) – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

Despite prices remaining consistent in the first half of 2021, an increase is expected in the immediate term. The projected 2% fall in the American cattle population by 2022 threatens to increase beef prices by near 5%. Investment into the alternative protein sector has dramatically increased; and the emerging food inflation mitigates income growth from counter-covid support measures, which may hamper the beef market growth. 

Key Trends and Insights

In the first half of 2021, prices remained unchanged against the end of 2020. Previously, beef prices in the U.S. surged on average by 10-14% in May 2020 when the first outbreak of the pandemic was recorded. They remained high until June and then fell slightly in August, stabilizing at around $4 to $9.3 per pound, depending on the type of beef, through to the end of the year.

Beef production is set to fall by 2% in 2021, owing to the decline in the cattle population. The dry weather conditions have led to the depletion of grazing land and the increased cost of animal feed; farmers are now being forced to quicken cattle slaughter and curb the number of livestock. Against a sustained demand for beef, these factors may cause meat prices to rise by 5% on average in 2022.

Rising soybean prices could also accelerate the costs of cattle meals. Expectations of further price increases accelerate not only the price for beef but the overall food inflation in the U.S. Should the inflation not be curbed by monetary authorities, it is to offset the positive impact of the government support measures on income growth and hamper consumer spending, which will spill over to the beef market.

A significant volume of beef and lamb imports are sent to the U.S. from Canada, Australia and Mexico. Canada is also experiencing a fall in the number of head of cattle, while the Australian Department of Agriculture, Water and the Environment is forecasting an increase in the cattle population over 2021-2022, which is to propel exports and mitigate the beef price growth. These factors should consolidate Australia’s position on the American beef market.

The alternative protein market is currently seeing robust expansion. Investment into this sector in 2020 trebled, reaching $3.1В. This may also constrain the growth of the American beef market, particularly taking into account rising prices.

The growing population and the established culture of beef consumption remain key drivers behind beef consumption in the U.S. Despite the above-mentioned risks, the American beef market is forecast to expand gradually to 13.5M tonnes by 2030 (IndexBox estimates).

U.S. Beef Production

In 2020, beef production increased by 0.3% to 12M tonnes, rising for the fourth consecutive year after four years of decline. In general, production showed a relatively flat trend pattern. The most prominent growth rate was recorded in 2017 when the production volume increased by 3.8% y-o-y. Over the period under review, production reached the peak volume in 2020 and is expected to retain growth in the immediate term.

In value terms, beef production dropped slightly to $86.1B in 2020. The total output value increased at an average annual rate of +2.4% from 2012 to 2020; the trend pattern remained relatively stable, with noticeable fluctuations observed throughout the analyzed period.

U.S. Beef Imports

In 2020, supplies from abroad of cattle meat increased by 9.6% to 1.1M tonnes, rising for the third year in a row after two years of decline. In value terms, beef imports rose sharply to $6.4B in 2020.

Canada (282K tonnes), Mexico (239K tonnes) and Australia (219K tonnes) were the main suppliers of beef imports to the U.S., together comprising 69% of total imports. New Zealand, Nicaragua, Uruguay and Argentina lagged somewhat behind, accounting for a further 27%.

In value terms, the largest beef suppliers to the U.S. were Canada ($1.7B), Australia ($1.5B) and Mexico ($1.4B), with a combined 71% share of total imports. These countries were followed by New Zealand, Nicaragua, Uruguay and Argentina, which together accounted for a further 25%.

In 2020, the average beef import price amounted to $5,996 per tonne, increasing by 4.9% against the previous year. Over the last eight years, it increased at an average annual rate of +2.6%. The growth pace was the most rapid in 2014, an increase of 15% year-to-year.

Average prices varied somewhat amongst the major supplying countries. In 2020, the highest prices were recorded for prices from Australia ($6,912 per tonne) and Uruguay ($6,480 per tonne), while the price for Nicaragua ($4,952 per tonne) and Argentina ($5,340 per tonne) was amongst the lowest.

Source: IndexBox AI Platform