US imported beef market edging higher
19 January 2017
Market prices for US imported beef increased this week, as a result of ongoing supply constraints but also off the back of a rise in domestic beef and fed cattle prices helping to support demand of imported grinding beef.
In the weekly update commissioned by MLA, the Steiner Consulting Group reports that the imported 90CL beef indicator increased 2US¢ from week-ago levels, to 199.5US¢/lb CIF (down 1A¢, to 585.88A¢/kg CIF). This represents an increase of 20US¢ (11%), from comparable figures the previous year.
Offerings from Australian suppliers remain limited and there are expectations for New Zealand bull slaughter numbers to head lower in February and March, in line with the seasonal trend. The market for bull meat moved higher over the course of the week – Steiner Consulting attributes these gains partly to short coverings. Some market participants reportedly took short positions in December and are now having difficulty securing product from New Zealand. Steiner reports suppliers out of New Zealand are looking to benefit from stronger demand in the US market.
US retail beef prices continue to move lower, helping to work through supplies that remained from the holiday period. Despite a drop in retail beef prices there still remains a gap between retail and wholesale prices. Steiner Consulting Group forecasts retail beef prices to edge lower over the coming months. The latest USDA data reports the following average prices for December:
- Beef retail price: $5.62/lb – 5.9% lower year-on-year
- Ground beef at retail: $4.04/lb – 9.9% lower year-on-year
- Beef wholesale (Choice cut): $1.94/lb – 3.2% lower year-on-year
With limited availability of imported beef supplies at present, imported beef maintains a small premium to US domestic beef. Steiner Consulting Group suggest this premium is likely to diminish when the New Zealand cow slaughter begins to ramp up. The report notes, however, that weather conditions in both Australia and New Zealand could impact the price differential between imported and domestic beef over the next few months. Another potential factor to consider will be the influence of Brazil in the US market.
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