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US lean beef market still moving lower
22 October 2015
While there has been an increase in the prices paid for feeder and fed cattle in the US, and for beef as part of the Choice and Select cutouts, the grinding beef market has not yet started to arrest its decline.
The domestic 90CL beef price (Urner Barry’s Beef Report) has declined from 298US¢/lb at the beginning of June to a current price of 228US¢/lb – a 23% drop in just over four months. This has pulled the imported market down with it – the indicative imported 90CL cow beef price, reported by the Steiner Consulting Group this week, was 201.5US¢/lb CIF. This was the 11th consecutive weekly decline in this indicator, in US$ terms. In A$ terms, the price declined another 21.9A¢, to 612.9A¢/kg CIF.
Lean beef prices in the US in the middle of 2015 may have been overheated, but the extent of the decline caught most in the industry by surprise. It is also being exacerbated by an increase in US cow slaughter, which has been keeping pace with year-ago volumes since mid-September, after trailing behind last year’s numbers by a significant amount until then.
High frozen beef inventories are also being worked through by end-users (mainly restaurants, and some retailers). The beef in storage was generally bought at much higher prices than current, so a number of buyers are reportedly waiting for a bottom in the market before purchasing again. The weekly Steiner report notes that the seasonal trend is for this to occur in late November.
