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End of 2015 sees US beef market building up
17 December 2015
The US domestic beef market continues to fall, keeping the usual buyers of imported lean beef out of action. This lack of buying activity means the imported market is still falling, but narrowing the gap on domestic beef. For the first time in almost two and a half years (since July 2013), the imported 90CL cow beef indicator quoted by the Steiner Consulting Group dropped below 180US¢ this week, to 179.5US¢/lb CIF – 4.5US¢ lower than last week. Thankfully for Australian exporters and the supply chain moving into this market, the impact has been partly softened by the lower A$. The price this week was 549.18A¢/kg CIF – still well down on the highs of late 2014, but is currently still higher than at any point prior to July 2014.
One of the key reasons for the drop in US beef prices is a slightly unseasonal run of higher slaughter over the past few weeks in the fed beef sector. While beef and dairy cow slaughter usually increases at the end of the year – as it has again this year – fed slaughter typically moves lower at this time of year. This extra supply on the market is contributing to a build-up of beef in cold storage, to levels higher than ever before. Retailers have reportedly found it difficult to move beef through stores without discounting heavily, as holiday demand is favouring other meats.
On the Australian beef quota for the US, shipments out of Australia have now started for the 2016 quota year, which has resulted in a large jump in beef exports to the US since the beginning of December. With just over two weeks remaining, 97.4% of the 2015 quota has cleared US customs – just under 11,000 tonnes remaining before 31 December.
