U.S. beef prices should remain high in 2022 due to lower production and increased demand for exports overseas, according to Rabobank’s quarterly report on the U.S. beef market.
The report notes that the American cattle herd peaked in 2019 at about 98.4 million head and has been slowly contracting since, with increased slaughter necessitated by drought in the West. “As a result, cow liquidation is expected to continue through 2022 and potentially into 2023 before true expansion is expected,” the report says.
In addition, the U.S. recently moved into being a net beef exporter, largely because of high Chinese demand. China is now the third largest beef export market for the U.S., helped along by interruptions in Brazilian beef exports to China due to a case of bovine encephalopathy.
The report predicts that domestic beef consumption will contract slightly, due largely to higher prices, but will still remain relatively high. The impact of the contraction will probably be felt more in retail and higher-end restaurants than in quick-service burger restaurants, “given [their] ability to meet the needs of the price-conscious consumer,” the report says.
It warns that “as tight as the 2022 market appears, it may be just the precursor for a bigger event in 2023.” As high rates of cow slaughter and declines in production continue, the beef market is on a tightening trend globally.