Global demand for cheaper beef cuts

GLOBAL demand for cheaper cuts of beef is expected to increase in the year ahead as rampant inflation and slowing economic growth see consumers trade down, Rabobank says in a newly released report. 

And Australia – as one of the largest exporters of beef ‘trimmings’ (the cheaper meat cuts which remain after prime cuts are removed) – is expected to be among the best-positioned countries to benefit from this increased international demand, particularly from the US, the agribusiness bank says in its Q3 Global Beef Quarterly.

“Evidence of declining consumer confidence in the face of slowing economies and rising inflation is starting to build,” the Rabobank report says. 

“In general, beef markets are resilient to changes in economic conditions. However, we do see movement within supply channels and price points that tend to favour cheaper options such as mince/ground beef and quick-service restaurants over the more expensive cuts and consumption channels.”

The bank forecasts the volume of trimmings consumed globally to remain strong and potentially increase in the second half of 2022 as consumers continue to trade down to lower-value beef cuts and cheaper proteins. 

Trimmings are typically used in the production of ground or minced beef.

“Major importers of trimmings include the US, China, Japan and South Korea,” the report says. “With these countries facing slower economic conditions in the second half of 2022, we expect consumer-purchasing decisions to favour the consumption of trimmings. The US and South Korea face high inflation pressures, whilst China and Japan continue to struggle with slower economic growth off the back of COVID.”

Adding to the changing consumption habits as a result of economic conditions is the potential for the US to dramatically increase its need for imported trimmings.  

Currently, high domestic beef production in the US is reducing the need for imported trimming products, the report says.  

But, if US production contracts – with a slowing of the current US cow liquidation – higher import volumes will be needed.

And Australia – along with New Zealand – will be in the ‘box seat’ to help fill that demand, says Rabobank senior animal protein analyst Angus Gidley-Baird.

Australia’s increased herd inventory will generate additional grass-fed and female slaughter numbers.

However, a caveat remains for the Australian market with our current limited processing capacity, Mr Gidley-Baird says. 

“Unless we can correct this, our ability to ramp up production and capitalise on any trimmings demand growth will be limited,” he said.

The global beef market overall remains strong, Rabobank’s Q3 Beef Quarterly says.

Cattle markets around the world also remain favourable, however, there has been some decline in cattle prices (in US dollar terms) from the previous quarter in countries including Australia, Brazil, Argentina and New Zealand.