Global beef trade in the first half of 2024 was stronger than market analysts had expected, but aggregate production in the major beef-producing countries is expected to fall slightly in the fourth quarter.

Rabobank analysts expect overall beef production in those countries to be down 3% year over year before declining further in 2025.

Higher year-over-year production volume in Australia in the fourth quarter won’t offset an expected decline of 1% in Europe, 7% in New Zealand, 3% in Brazil, 5% in the U.S. and 2% in China.

While production is forecast to be 3.8% higher than the 10-year average for the fourth quarter, it is expected to fall below the 10-year average by the third quarter of 2025.

U.S. production

“The lower production volumes in the U.S. and declining volumes in Brazil will be the principal cause for this contraction,” the analysts said in their latest beef quarterly report.

Although beef production in Brazil, Australia and China are expected to remain above the 10-year average in the first quarter of 2025, the drop in U.S. production below the 10-year average in the third quarter of 2024 and into 2025 will have a big impact on the global market, they said.

The U.S. beef cow herd entered the stabilization phase of the cattle cycle in the first half of 2024, with January to July cow slaughter down 17% year over year.

While pockets of drought exist in West Texas, New Mexico, Kansas and the Northwest, July data showed 13% of the nation’s beef cow herd is in some degree of drought — lower than the 20-year average of 29%.

Heifer retention

Heifer calf retention during the September to November weaning season will signal whether the cow-calf segment embraces herd rebuilding going into 2025, the analysts said.

As for cattle prices, bearish sentiments in the equity markets have crept into cattle markets, stalling the recent rally.

Nearby live futures on the Chicago Mercantile Exchange have declined 4% from July highs and feeder cattle futures lost 8%. The USDA five-area fed steer cash market price declined 3%, and the feeder cattle cash price fell 3% over the same period.

“The cattle market price trend may remain sideways to softer over the next 45 days until seasonally lower supplies and better demand offer more price support,” they said.

Demand tested

But beef demand will be tested in the second half of 2024.

The USDA all-fresh beef retail price reached a new all-time high at $8.15 a pound in July.

Softer U.S. beef exports and restaurant traffic are the biggest detractors on the demand side. January to June beef exports volumes were down 5% year over year, led by declines in South Korea and China.

The National Restaurant Association has reported year-over-year declines in same-store sales for six consecutive months, and traffic has been weaker since April 2023.

“Weaker consumer sentiment will be a greater risk to beef demand in late 2024 and 2025,” the analysts said.