US meat markets getting cheaper into 2016

27 August 2015

US beef and cattle markets have been trading at historically high prices for much of the last two years, but there are some signs that the market could start to move down over the next few months.

US analysts with the Steiner Consulting Group and the Daily Livestock Report have noted the volatility in cattle futures in recent weeks, and the general downward trend out to 2016. Much of this has been attributed to the recent drop in stock markets, and the effect this could have on consumer confidence and purchasing activity. The sharp decline in China is expected to have an impact on demand for US exports in other key markets in North Asia, like Japan and Korea. Further on the US cattle futures side is that the herd expansion, which has been expected for some time, appears to be starting to come to fruition.

The United States Department of Agriculture (USDA) forecasts beef production to increase next year and beyond, and pork and poultry production are also expected to grow. Disruptions to US poultry exports have also resulted in more chicken remaining on the domestic market. The USDA Cold Storage report, released over the weekend, showed frozen inventories of beef, pork, and chicken, as at the end of July, were 16.5% higher than the same time last year. This larger volume of meat is being read as bearish for the meat industry – more so for chicken and pork than for beef, but if economic conditions also slow, then beef could be more affected.

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