Domestic demand driving imported beef prices
11 May 2017
US imported beef prices moved higher this week, as a result of tight US domestic beef supplies, high domestic beef prices, and further supported by limited cattle availability out of Australia and New Zealand.
The imported 90CL beef indicator edged 0.5US¢ higher from week-ago levels, to 213.5.5US¢/lb CIF (up 7A¢, to 637.60A¢/kg CIF).
End users short of product
In the lead up to the Memorial Day holiday, US end users have struggled to secure product on the domestic market, underpinning a lift in imported prices. Demand for imported fat beef trim has been particularly strong as the domestic equivalent has now surpassed that of all other markets, while imported lean beef prices remained firm with asking prices from Australian remaining high. The seasonal decline in New Zealand availability is also approaching, resulting in tight spot supplies and higher imported prices.
Steiner Consulting Group concludes that the movement in the imported beef market is being driven by the dynamics of the US domestic market – particularly extreme fluctuations in price. Despite US production increasing, the availability of domestic product on the spot market has been limited off the back of extremely low forward prices late last year. Consequently, retailers (through a warmer than normal winter) have been able to market beef more aggressively at a much lower price. Steiner Consulting Group reports that the lower prices on offer in the domestic market meant consumers reacted by purchasing more beef more frequently, or those who previous purchased cheaper competing proteins returned to consuming beef.
The increase in US beef exports has also contributed to a shortage in the domestic market, in particular exports of fat trim to Japan. Click here for the latest US exports.
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