A surge in buying for Memorial Day has driven US beef prices to record levels in the past week.
USDA is expecting 2025 US beef consumption to hold at near last year’s levels which would be mean US beef demand has increased given prices have risen 10-15% over the same period. Year to date US consumer spending on beef has risen around 5% in real terms this year which would support this assertion.
Source: LSEG Workstation
This chart show retail prices for US ground chucks in $US/lb
Certainly, higher US beef prices are not being driven by export demand. So far, the US has exported 277,600t of beef this year, nearly 7% less than the same time in 2024. While exports to countries like South Korea and Canada have remained strong, export sales to China are currently 32% behind 2024.
The US beef market has been the driving force in the recovery of Australian beef and cattle prices since 2023 with the US share of Australian beef exports rising from 22% to 29%, more than making up for stagnant demand from Asia.
Source: DAFF
This chart shows the share of Australian exports by destination.
The option for Australia to divert product away from the US market appears limited with the economies of our large Asian customers struggling.
Japan's Gross Domestic Product (GDP) for the first quarter of 2025 contracted by 0.2% compared to the previous quarter and by 0.7% vs last year — much steeper than the forecast 0.2% contraction.
The Bank of Korea (BOK) cut rates Monday as economic activity contracted in the last quarter by 0.2% compared to the previous three months.
And while China’s economy is faring better, and it has increased purchases from Australia given the effective ban on US beef exports with their non-renewal of US beef export licenses, its beef sector is struggling and it’s doubtful they have the appetite to significantly increase imports.
Across the medium term, with US beef production forecast to fall as it commences herd rebuilding, US will increasingly look towards imports to meet its consumption needs with net imports into the US expected to rise to above 1 million tonnes over the next few years. This should underpin good demand for Australian beef across the medium term.
But while the US market looks to be sailing along there are some worrying signs. US consumer sentiment is slumping, and fast-food sales have fallen, with chains looking to increase the use of poultry and pork in their promotions. At current record price levels, US beef demand will be sensitive to a decline in US household financial health which I’m expecting to see unfold over the next few months as inflationary pressures increase due to tariffs and mortgage rates increase due to concerns about US Government debt.
A slump in US beef demand is the key risk to the current rosy outlook for global beef prices.
Elders Business Intelligence Analyst Richard Koch combines a deep understanding of global market dynamics with regular insights from Elders staff on the ground, providing informed analysis shaped by both data and real-world observations.
