Higher prices for US imported beef

US imported beef prices lifted this week, the result of ongoing supply constraints and higher asking prices from overseas packers. The US dollar continued to depreciate against the Australian dollar this week, further supporting the increase.

The imported 90CL beef indicator moved 3.5US¢ higher from the previous week, to 207.5US¢/lb CIF (up 4A¢, to 568.62A¢/kg CIF).

US end users have noted that the trading of imported beef has been challenging, especially for extra lean grinding beef. A combination of factors, including deteriorating seasonal conditions in Australia, weaker dairy prices in New Zealand and growing supplies of US fed beef has led to bearish market participants taking a wait-and-see approach before covering supplies for March and April.

According to the USDA, the number of US cattle on feed, as at the 1^st January, were 8.3% higher than a year ago. Such an increase could see front-end supplies build up quickly if feedlots do not aggressively market cattle. However, the market sentiment has ensured domestic and export demand remains robust – US beef exports in January are estimated to be 15% higher year-on-year. The USDA cattle on feed report also indicates that the retention of heifers for herd rebuilding in the US has all but come to an end, given how total heifer placements have corresponded with previous cattle cycles.

 Highlights from the week ending 26^th January:

• US fed cattle slaughter was lower this week as winter weather caused some plants to either shut down completely or work reduced hours

• CME fed cattle futures declined almost the daily permissible limit on Thursday only to recover much of the ground lost on Friday. Expectations are for futures to decline once again on Monday

• New rules for electronic monitoring of the trucking fleet, which came into effect in December, have further compounded the shortage of trucks and US processors and packers are in the process of raising delivery rates to cope with the shortage of trucks

Click here to view the Steiner Consulting US imported beef market weekly update.