AUSTRALIA'S tight cattle supply has protected export beef prices from the downward pressure that would otherwise have hit hard on the back of United States herd liquidation and ensuing heavy beef supplies.
The main concern has been the longer-term consequences of the big ground the US has made in China, particular in the high-end space.
With contraction in US beef production now forecast for 2022, that space will be a key watch area for Australian exporters, along with how demand in the US itself settles as pandemic influences change.
So say animal protein experts at big agribusiness lender Rabobank, whose latest global beef quarterly, released today, hones in on the implications of the US moving from becoming a net importer to a net exporter.
Rabobank expects US beef exports to double in 2022. Markets in Japan, South Korea, Mexico, and Canada will remain strong but the growth in exports to China is driving the increased export volume.
Earlier this year, volumes to China lifted above 19,000 tonnes, propelling it to the third largest export destination for the US, and since then volumes have continued to rise.
Australia's tight supplies, and disruptions from Argentina and Brazil, along with the growing demand for high-quality beef in China, have supported US export growth, Rabobank said.
Still, the phenomenal demand for beef on US home soil, related to pandemic upheaval, has meant its export markets have had to keep pace price-wise and that has relieved some of pressure of Australia's high cattle prices, Rabobank's senior animal protein analyst Angus Gidley-Baird said.
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Australia remains competitive in China.
Rabobank's latest figures show in October US frozen beef was selling in China for US$8952 a tonne, compared to Australian product at US$6833/t.
Fresh chilled beef from the US was US$15369/t, against Australia's US$13320/t.
Of course, packers in the US posted huge per-animal margins this year where Australian processors have been in negative profit margin territory.
The US export expansion into China is set to stay, according to Rabobank, as it is meeting China's growing demand for higher-quality beef.
However, the contracting US production - Rabobank says to the tune of 2.5pc next year - should keep prices firm and set a benchmark in the global market.
Cattle prices around the world continue to creep up in the face of tight supply and strong demand, much of it still pandemic-driven, Mr Gidley-Baird said.
Brazil is the one key exception, with reduced access to China leading to falling prices through September.
Analysts are forecasting the global beef market to tighten further in 2022 and against a backdrop of ongoing strong demand, that augurs well for prices.
The demand story, however, is complex.
"It is still very much pandemic related but has shifted to being driven by lockdown exits - people with disposable income, but still restricted travel-wise, are looking to spend on luxury goods, including high quality beef," Mr Gidley-Baird said.
"This is very much the case in the US, however we are conscious of the fact a lot of US demand been been driven by fiscal stimulus and travel restrictions.
"The question is will they go back to old habits or continue to be willing to pay what they currently are for food, and meat in particular?"
And as tight as the 2022 beef market appears, it may just be the precursor to a bigger event in 2023, the Rabobank report said.
Contracting US production is not expected to reverse until 2023 or beyond, and limited export supplies from Australia will be ongoing until at least then, Mr Gidley-Baird said.
"Global beef markets are on a distinct tightening trend," he said.
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The story US beef flows to ease but China still firmly in their sights first appeared on Farm Online.