US beef market dropping fast

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The US beef market is following the fed cattle market in falling rapidly at present, with buyers showing little, if any, interest in purchasing product – instead, waiting to see when prices will find some stability. For domestically (US) produced beef, the drop in prices has been startling over the last week, across all categories, while most of the impact on the imported beef market has been in fattier trimmings items, so far.

In this week’s Steiner Consulting Group report, prepared for MLA, it is noted that the domestic 90CL beef price dropped 25US¢/lb (55US¢/kg) in the last week – the largest weekly drop ever recorded. The imported 90CL cow beef indicator, in contrast, declined 1US¢, to 229US¢/lb CIF. This is 62US¢ lower than one year ago. In A$ terms, however, the currency movements of the last year have been favourable, meaning that the indicator this week was 720.76A¢/kg CIF (up 3.3A¢ on last week), just 14.8A¢ lower than one year ago.

Price declines in the US beef market are not unusual at this time of year, but the recent falls have been much larger than normal. The current large supply situation affecting the US feedlot sector means there will likely be further falls before the end of the year. Australian beef export volumes will remain constrained by what exporters have available under the quota, and how much they are willing and able to trade outside the quota.