For those in the beef and cattle trade industries, this past year has been an impressive one. Beef trade in the U.S. and North America enjoyed record highs in terms of prices. Several factors accounted for this, including persistent challenges with supply chains limiting supply access. Likewise, consumer demand remained relatively strong despite economic and pandemic-related issues. The question now is whether or not the North American beef trade will remain just as strong in 2023 or weaken. While predictions are difficult to make, the following describes the current and anticipated state of the beef trade in the U.S.
Regional Predictions in North American Beef Trade
In an effort to anticipate what the beef trade in the U.S. will be regionally, it’s worth examining the past year. Overall, U.S. imports and exports to neighboring countries fell slightly last year. Exports of cattle to Canada declined but increased notably to Mexico. Likewise, imports from Mexico fell while cattle for slaughter from Canada increased. But overall, the balance of North American beef trade for the U.S. remained relatively stable. And given the prices of beef for 2022, this was a good thing.
Looking ahead at regional beef trade, some notable shifts may affect markets in 2023. For one, beef production in Mexico is expected to increase significantly in 2023 as the country has been boosting cattle volumes. As such, beef exports to our southern neighbors will likely be lower. At the same time, consumer demand for beef within the U.S. has recently declined. The net effect of these two influences will likely shift supply–demand curves in favor of lower prices compared to 2022. While the degree of the price changes is not expected to be dramatic, some downward shifts are highly likely.
Global Predictions in North American Beef Trade
In terms of global beef markets, supply chain disruptions resulting from the pandemic persisted during 2022. As such, beef trade between the U.S. and other nations continued to be affected in a negative way. Prolonged COVID restrictions in China reduced global demand even more, including from the North American beef trade markets. This lower demand placed downward pressure on beef and cattle prices. But global inflation and rising diesel fuel prices helped maintain higher pricing structures due to costs. As a result, beef trade in the U.S. saw reduced volumes but relatively stable prices.
In the coming year, some major shifts are expected in the global beef and cattle markets. For one, the recent lifting of COVID restrictions in China will significantly boost demand for beef worldwide. Brazil was a major source of beef for China in the past. However, the recent outbreak of bovine spongiform encephalitis (BSE) has impacted beef and cattle supplies this year and will continue to do so. This likely means the Chinese demand for the U.S. beef trade will increase. These developments combined with lower production of beef in Europe will place upward pressure on beef prices. This will be quite favorable for the U.S. in the coming months.
Additional Economic and Supply Chain Factors
In terms of local beef trade in the U.S., freight rates naturally affect beef and cattle prices as well. Recent increases in diesel fuel prices have driven up costs and prices notably this past year. But based on recent diesel fuel projections, these costs are expected to gradually decline soon. At the same time, however, inflationary pressures could affect consumer demand for beef. This has not yet happened, but it remains an important variable. With this in mind, hard predictions for the coming year regarding North American beef trade are difficult to make. But given all the considered factors, freight volumes should rise while prices remain steady. And for those in the freight industry, this paints a favorable picture.
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