And this may support increased trade from Australia, it says, as Australian beef supply lifts and prices ease while beef production declines in the United States, a key supplier of beef to the Chinese market.
Positive signs
“After three years of living under COVID-19 policies, we believe Chinese consumers are becoming more pragmatic, spending more money on the products which they perceive to be practical, valuable and worthy,” the report said.
Rabobank senior animal protein analyst Angus Gidley-Baird said weaker economic conditions would have some impact on Chinese beef consumption among lower-income groups.
“But to other consumer groups, beef is perceived to bring better taste, more health benefits and different eating experiences compared with traditional meats,” Mr Gidley-Baird said.
“These consumer groups in China — which are mainly the younger generations, middle-to-high-income families and health-conscious people — are increasing their frequency of beef consumption.
“As consumer groups become more segmented, we see beef experiencing both trading up and trading down. As such, we expect a gradual increase in high quality beef consumption, although total consumption may increase more slowly.”
While food service has previously been the main channel for beef consumption, the bank now sees rising beef sales in retail channels.
“This trend is supported by the robust growth of new tech cookers and portable ovens,” the report said.
“Another trend is the rapidly-growing pre-prepared dish market. These dishes have achieved high double-digit growth in the past two years, and we expect this to continue in the coming five years, although at a slower rate.”
China should remain the main export destination for the world’s beef production, the report said.
Prices stabilise
The report also said, in Australia, cattle prices had levelled out after dropping in late 2022.
Mr Gidley-Baird said the Australian cattle market took a steep turn downwards in late 2022 as it “appeared the wind had finally blown out of the sails”.
“Prices have been more stable since the start of this year, however, suggesting the market has found a new equilibrium,” he said.
“We believe current prices are more sustainable — providing more favourable returns for feedlots and processors — and that they will continue to track around current levels for the first half of 2023.”
He said production volumes were starting to show promising signs of recovery, as slaughter volumes increased in late November and through early December to reach the highest levels in 2022.
Mr Gidley-Baird said the increased production would lead to a rise in export volumes, “even though word on the street suggests that supply chains are already quite saturated with product”.
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