Rabobank, Media Release, 10 June 2022

First-mover companies around the world are taking the next steps to meet their emissions reduction goals and beginning to release climate-neutral beef products on to shelves, Rabobank says in its latest global Beef Quarterly report.

But, with consumers already paying more for beef, the big question is ‘will the market be able to support a further lift in beef prices to offer a premium payment for net-zero-carbon beef?’, it says.

“We are starting to see positioning of low-emission and climate-neutral beef products on shelves around the world, but it is not an easy time to translate sustainability and emission commitments into action,” says Rabobank senior animal proteins analyst Angus Gidley-Baird, “with consumers around the world paying more for beef now than at any previous time in history.

“In our view, the full cost of production (sustainability initiatives aside) is not currently being passed on to consumers. Consumers’ willingness and ability to pay is likely to be tested in 2022 as inflation levels climb around the world.”

The first signs of softening consumer confidence are already apparent in most markets, the report says, with wholesale prices for beef coming under pressure even though production costs are higher. A downward adjustment of cattle prices and upstream input costs will be needed to restore processor margins and to maintain beef’s competitiveness among consumers. “We expect ongoing adjustments of consumption and margins in all markets as we head into Q3 2022,” Mr Gidley-Baird says.

For Australia:

For the Australian beef sector, the Q2 2022 Beef Quarterly says substantial rain across many parts of the country, including Queensland, has provided support to the cattle market.

“Although not necessarily season breaking, it may allow just enough pasture growth to encourage producers to hold or possibly even pick up some additional cattle,” Mr Gidley-Baird says.

The report says although Australian cattle supply is increasing, the favourable seasonal conditions are enough to maintain producer restocking demand.

“While we believe prices will drift down for the remainder of the year, the good seasonal conditions may mean prices remain relatively static into Q3 before producers reassess their buying appetite as summer approaches,” Mr Gidley-Baird says.

The report notes production volumes remain constrained – with Australian cattle slaughter numbers dropping to their lowest level in over 35 years in Q1 as processing plants contended with Covid-restricted workforces and a general lack of skilled labour.

Australian biosecurity operations are on high alert after official reports of lumpy skin disease and foot-and-mouth disease in near-neighbour and trading partner Indonesia, with the high-infectious diseases not only having potential impacts on cattle productivity but also trade implications.