Global animal protein production will grow at a slower rate in 2024 following a year of tight margins, with beef and pork both expected to contract.
The newly released Global Animal Protein Outlook report from Rabobank tips that poultry and aquaculture will drive the growth in overall protein production, while other species decline.
The report suggest that it will be a time for animal protein companies to take stock of their strengths and prepare to transition their supply chains to an operating environment with high costs and tight margins.
Rabobank analysts forecast marginal year-on-year production growth in the major markets of North America, Brazil, Europe, Oceania, China and Southeast Asia of 0.6 million tons - or 0.5 per cent - to a total of 247 million tons next year.
This is compared growth of 2.1 million tons, or 1pc, in 2023.
According to the outlook, Brazil and Southeast Asia will show the fastest production growth for poultry and meat, while China's production growth will slow markedly after rapid expansion in 2023.
RaboResearch senior protein analyst Angus Gidley-Baird said Australian producers could expect to face ongoing challenges with supply chain costs, weaker demand in some markets, stock build ups and weather conditions.
"If you got through this year, next year should be a slight improvement but not a return to what we've seen in the 2020 to 2022 period from a livestock producer point of view with prices," he said.
"In the global context, we're lucky in a sense that there's not a huge volume of additional protein coming on the market.
"Particularly from a beef point of view, we think that the overall global production of beef in the key markets will net out at about a 1pc decline."
Within Australia, livestock turnoff is expected to rise off the back of heightened supply and the likelihood of drier seasonal conditions.
Cattle slaughter numbers are expected to increase 7pc, adding to the 16pc increase seen in 2023, while sheep slaughter numbers are expected to increase 11pc.
Beef production is expected to increase 4pc, while lamb production should increase by 1pc.
"[For lamb] there's not much change from a New Zealand point of view and increased Australian volumes on the market, that's going to mean, globally an increase in supply," Mr Gidley-Baird said.
"Unfortunately, unlike beef that has the catalyst for change, being a contracting US beef production system, the lamb market is really heavily reliant on any sort of correction in supply because we expect the demand complex to continue to be weak.
"With the large volumes of Australian product on the market, it's going to be a challenge to move it."
As a result of the US beef herd decline, Australian beef is expected to be more competitive in markets such as Japan, South Korea, and China, potential driving cattle prices up over the next two years.
Plant-based meat alternatives are expected to continue to decline in popularity with both customers and investors.
Sales of plant-based meat alternatives at a retail level have been on a downward trend since late 2022 with with US retail volumes of meat alternatives down by 15pc for the first nine months of 2023, compared with a decline of 4pc for meat and 1pc for poultry.
Investments in plant-based meats also dropped by more than half, and Mr Gidley-Baird said there could be a number of factors behind declining consumer and investor interest.
"It's still priced higher than most other proteins... so we need to ask is this the consumer responding to a reduced disposable income, making a more cost conscious decison or is it because the consumer just doesn't have that same concern about things that they might have had a couple of years ago when COVID was running around and everyone was a lot more sensitive to health... some of the messaging they ran through that process might have attracted consumers to that space and maybe now it's not as much of importance," he said.
"Their performance is not anywhere near as strong as the conventional proteins over the last 12 months so it will be interesting to see whether they recover or whether they have got through their honeymoon phase and this is just where they sit as a component of the protein market."