Beef Market Analysis

Beef is an important component of a healthy diet, providing protein and essential vitamins and minerals to billions of people. Cattle raising and beef production provides income to farmers and ranchers around the world, along with significant employment and revenue to food manufacturers and ancillary industries.

Key facts about the global beef market:

The US is the world’s largest beef producer, estimated by IHS Markit at 12.3 million metric tonnes in 2019 and about 20% of total global output. Brazil is the second largest producer at 10.2 million metric tonnes, the wider European Union produces 7.9m million metric tonnes and China at 6.9 million metric tonnes.
Brazil is the largest beef exporter, estimated at 2.4 mmt in 2019, followed by 1.8 MMT out of Australia, 1.6 mmt from India (including buffalo meat) and 1.4 mmt from the US. These four countries account for more than 60% of global beef exports.
In the last two years, China has become the leading beef importer, with an estimated volume of 2.3 mmt in 2019. The US is second largest at 1.4 mmt, followed by Japan at 0.9 mmt and South Korea at 0.6 mmt.
The largest beef processing and manufacturing companies include JBS SA, Tyson Foods, Cargill Protein, Hormel Foods and Marfrig SA.
Frenzied buying by China in 2019 resulted in lean boneless beef prices reaching record levels in the international market. However, subsequent consumer resistance to the higher prices in China and problems with movement of people and products due to the coronavirus have resulted in prices dropping by 30% from those highs.

Key themes affecting the global beef market

Brazil continues to dominate the global cattle and beef sector, with ongoing growth of the cattle herd and sizeable potential for further increases in beef exports. The growth phase of the US cattle herd has come to an end for now, with prospects of plateauing to mild liquidation in the early part of the decade. However, US beef production will reach record levels in 2020. With increasing beef production in the latter part of the last decade and strong beef demand (domestic and export), US beef packers have experienced increased market leverage and record margins over the last two to three years. This followed tight to negative margins through most of the first half of the last decade.

China has become the world’s largest beef importer over the last two years, with an increase of more than 50% in 2019 over 2018 and prospects for further increases exceeding 20% this year. However, the 2020 coronavirus epidemic is currently causing disruptions in protein trade into the region.

Drought conditions have reduced the Australian cattle herd to the lowest level in two decades and rains in 2020 in Australia have led to sharp reductions in cattle harvest as producers attempt to rebuild herd inventories. In turn this will result in near term reductions in beef production and exports and could provide opportunities for other countries to increase export activity into some of the more lucrative markets in Asia and other regions where rising incomes have contributed to increasing global demand for proteins. Countries that are expected to show increases in beef exports in 2020 include Brazil, US, India, New Zealand, Argentina and Brazil.

US Beef Packer Gross Margin (US$/head)
	Q1	Q2	Q3	Q4
2015	($33)-$99	$32-$260	$102-$250	$102-$276
2016	$76-$198	$108-$291	$206-$315	$122-$342
2017	$85-$226	$89-$376	$257-$36	$177-$31
2018	$142-$260	$234-$448	$290-$432	$257-$369
2019	$209-$285	$278-$408	$354-$644	$246-$581

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