GRAND ISLAND, NEB. – For 2022, Rabobank predicts agile business leaders will keep seeing sustained growth in the face of across-the-board inflation in the four key areas of protein supply chain cost increases: animal feed, labor, energy and freight, according to Rabobank’s “Global Animal Protein Outlook 2022: Capitalizing on Ongoing Market Disruptions.” Progressive protein companies need to capitalize on the ongoing market disruptions in 2022, while those expecting a calm will be disappointed, according to Rabobank analysts.

“This next year has the potential to accelerate structural change as a result of escalating costs,” said Christine McCracken, senior animal protein analyst for Rabobank. “Success will most likely go the players that adapt to the changing business environment; embracing consumer preferences for sustainability and preparing for a surge in demand as economies continue to reopen and adjust following COVID-19-induced lockdowns.”

Continued consumer demand for, and the ongoing change to, more sustainable animal protein production, biosecurity challenges and the effects of COVID-19 will accompany supply chain cost increases.

In North America, Rabobank estimates beef production will decline to the point of a reduced fed cattle supply, but balance operational packing capacity. In 2020 and 2021, estimated fed cattle supply averaged 15% above operational packing capacity. Rabobank expects a relative balance by the 2nd quarter of 2022 due to a 2.5% drop off in slaughter YOY.

US beef cow numbers are expected to fall 1.8% YOY to a Jan.1, 2022 inventory of 30.6 million head. The report forecasts Canada’s annual beef production to decline by 2% YOY while drought conditions throughout 2021 will slow Mexico’s growth in beef cow numbers. Rabobank said a 1.9% YOY increase in the 2021 calf crop supports a 2.7% increase YOY in Mexico’s 2022 beef production.

Poultry in North America should see another year of strong returns, with tight supplies and expected export growth sustaining price strength in the markets. The report expects US broiler productivity to recover and poultry supply to increase supporting a 2.4% YOY growth in production for 2022. Broiler production in Mexico will see slower growth due to high costs and weak demand.

Production growth for North American pork could be limited as US hog producers might practice caution when considering expansion due to rising costs and regulatory uncertainties. US and Canadian pork consumption should keep pork values strong, while economic weakness will continue to challenge the demand for pork in Mexico.

In terms of consumer attitudes and purchasing behaviors, Rabobank’s “Global Animal Protein Outlook 2022: Capitalizing on Ongoing Market Disruptions,” predicts global demand for beef to remain solid, demand for poultry and pork to improve and strong sales of alternative proteins.

“Although demand will be strong and support livestock prices, North American feed costs are expected to remain at high levels,” said Don Close, senior animal protein analyst. “Producers will need to be vigilant on finding opportunities to lock in profitable margins.”

To see the full report for all regions across the globe click here.