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MLA market and industry news 23 May 2013

Beef Central, 23/05/2013

Meat & Livestock Australia publishes a range of market intelligence updates each week relating to developments in domestic and export demand, red meat marketing initiatives and research and development programs. Below is a summary of recent MLA-generated articles and headlines with relevance to the beef and cattle sector. All items are authored by MLA staff, with no input from Beef Central.

 

  • US corn plantings reach 71pc
  • Fewer US cattle on feed
  • Good impressions from US NRA show
  • Brazilian beef exports surge in April
  • Potential co-product values increase in April
  • Cattle prices ease across South America
  • Beef and lamb sales strong in April
  • Sluggish trade in Korea, despite improved economy
  • US seasonal demand slow to appear this year
  • Industry sustainability hits Sydney Opera House

 

US corn plantings reach 71pc

After a sluggish start to US corn plantings, last week saw an estimated 43pc of the total forecasted crop planted, assisted by a dry period and modern planters with improved planting capacity. This takes the total area planted to 69 million acres, or 71pc of the projected total (Steiner Daily Livestock Report). Proceedings may slow slightly for the final 29pc due to forecast rain, however, planting are likely to be completed in the coming weeks, projected to total 97.3 million acres. While there has been ongoing speculation that farmers may switch out of corn into soybeans, evidence remains mixed. There has recently been a rally in soybean prices, which may tempt some growers to switch crops; however, logistically it would be quite challenging this late in the planting season.

 

Fewer US cattle on feed

The number of cattle in US feedlots over 1000 head capacity at May 1 was 3.4pc lower year-on-year, at 10.74 million head – despite a 15pc increase in the number of cattle placed on feed throughout April, at 1.75 million head. Cattle marketed out of feedlots lifted 2.2pc on last year, to 1.86 million head through April (USDA Cattle on Feed). Most of the cattle placed on feed during April were relatively heavy, with cattle over 800lbs (363kg) making up 63pc of placements, as high feed costs and weak returns from feeder cattle encourage producers to keep cattle on pasture as long as possible. Hindering this is that pasture conditions in the southern states remain poor, which will force more cattle into feedlots through summer. In saying this, the number of cattle less than 600lbs (272kg) placed on feed during April also lifted compared with last year, albeit by just 6pc.

 

Good impressions from US NRA show

The US National Restaurant Association’s annual trade show was held recently in Chicago, with MLA and five importers representing and promoting Australian grassfed and grainfed beef and lamb. This show is the place to demonstrate how a product can fit in with the supply needs of the US foodservice industry, with organisers reportedly confident attendance exceeded last year’s 61,000 people. Getting Australian product into restaurant chains in the US can be lucrative, with a number of chains using thousands of tonnes of protein each year. In 2013, US restaurant sales are projected at US$660 billion. The importers on MLA’s booth generated a number of solid new leads that will be followed up with further information, presentations and product testing. Existing customers were also contacted, looking at ways to continue moving Australian meat into the market.

 

Brazilian beef exports surge in April

Brazilian beef exports during April reached their highest volume since 2007, totalling 95,200t – an increase of 37pc year-on-year. Underpinning the increase in shipments was a recover in exports to Iran and Egypt, assisted by a decline in export prices. Russia and Hong Kong remained as major destinations. After a slow start in the first quarter of 2013, shipments to Egypt during April rose 40pc year-on-year, to 8139t. Despite still facing bureaucratic issues in Iran (in December 2011 the country stopped issuing import licenses), beef exports for the same period recovered significantly, up seven-fold year-on-year, to 4244t. The ban on US chilled beef by Russia last February has contributed to substantial growth on Brazilian chilled beef exports to Russia, with shipments during April totalling 934t. Exports to Hong Kong continued to register significant growth, totalling 19,122t.

 

Potential co-product values increase in April

The potential co-product value for a Japanese steer (average 331kg carcase weight) during April increased 7pc year-on-year, averaging $206/head, with strong demand for hides, and meat and bone meal, buoying prices (Kurrajong Meat Technology – April co-products monitor). Meat and bone meal values ($34.70/head) were 5pc higher on last month and up substantially (36pc) on the corresponding month last year, underpinned by strong demand from Indonesia and China. Hides (281-350kg) improved 33pc year-on-year, to average $59.67, with weak US supplies, along with increased tanner demand from Asia and Italy, triggering generally higher prices. The potential value for tallow rose 5pc month-on-month, to average $54.59/head, yet fell 15pc on last year. Tallow prices are likely to remain firm, as demand from China’s oleo-chemical producers and Singapore’s renewable fuel companies is likely to continue. The average value for beef offal remained relatively unchanged on March, at $57.09/head, however declined 1pc year-on-year.

 

Cattle prices ease across South America

South American steer prices have fallen to their lowest level since early 2013, with seasonal conditions forcing additional cattle to market and placing downwards pressure on prices. The Uruguayan market continues to feel the impact of difficult seasonal conditions, with a premium emerging for heavy steers that meet tight specifications (finished in natural grasslands) – averaging US370¢/kg cwt last week. A lack of rain, combined with poor pasture growth in Central Cacho region, Paraguayan steer prices dropped US10¢/kg last week, averaging US290¢. With the deterioration in pasture quality, the quality of cattle offered across Brazil has reportedly declined, with prices back across all regions. Cattle to slaughter in Sao Paulo averaged US326¢/kg last week, while Argentinean steer price remained steady, averaging US344¢.

 

Beef and lamb sales strong in April

Butchers reported relatively strong beef and lamb sales for the month of April, despite being slightly weaker year-on-year, according to MLA’s butcher survey carried out by Millward Brown. Of the 150 survey respondents, 39pc reported beef sales as ‘very good’ to ‘excellent’, although down 8pc on last year, only 2pc reported ‘poor’ sales. Around 32pc of butchers recorded lamb sales as either ‘very good’ to ‘excellent’, this was seven percentage points lower than the same time last year. Despite the good quality, pork cuts have become less popular in recent weeks, reflected through sales performance, with 30pc of butchers recording ‘poor’ to ‘fair’ sales. Chicken was the only meat to remain on par with April 2012, with 37pc of respondents again reporting either ‘very good’ to ‘excellent’ sales. When asked about cut trends, respondents noted that beef striploin, New York, porterhouse and T-bone cuts were the most popular in April, with butchers attributing this to the cooler weather and current price of beef. 

 

Sluggish trade in Korea, despite improved economy

While the Korean economy is suffering, there are signs of improvement in the economic situation. Hankok IIbo suggests Korean private consumption expenditure during the first quarter of 2013 rose for the first time this year on the back of the Gross Domestic Product expanding 0.9pc during the first quarter of 2013, compared to the December quarter last year. Additionally, jobless rates improved in April to 3.2pc, from 3.5pc in March, assisting April consumer sentiment index being higher than 100 points, at 102 points – above 100 points for fourth consecutive months since the start of the year (Bank of Korea, Yonhap News). However, this week’s imported beef trade in the Korean market was reportedly slow, with stock levels of Australian beef remaining relatively high. Though May is traditionally one of the highest beef consumption months in Korea, demand for imported beef is reportedly sluggish. As a result, Korean weekly wholesale prices for most items of imported beef eased last week on the week before, with Australian chuck roll and brisket each down 1pc, at KRW 8200/kg and KRW 6900/kg, respectively. However, US short rib prices were up 1pc on last week, at KRW 12,900/kg. Hanwoo carcase prices remained the same level as last week, at KRW 11,174/kg.

 

US seasonal demand slow to appear this year

Demand for lean ground beef and other grilling products generally picks up through late spring in the US, but there has been very little in the way of increasing demand for beef so far this year. Due to currency shifts this week, in A$ terms, prices were in fact slightly stronger, with 90CL beef down US5.5¢/lb, to US184.5¢, or in A$ terms, were up A1.8¢, to A384.8¢/kg – albeit, due currency movements, rather than strengthening demand. With Memorial Day next weekend, there are signs that this peak demand period has not generated the kind of trade that is usually expected, and if normal price patterns follow the long weekend, lean beef could continue to get cheaper through June. In US domestic issues, pasture conditions, which were bad last year, appear worse in many places at the moment. There is reportedly a large portion of the US beef cow herd in regions with more than 40pc of pastures rated as either poor or very poor. The medium term impact of this will most likely be a sharp tightening in beef supply in the US in 2014 – if there is scope for US producers to begin to rebuild herds.

 

 

Industry sustainability hits Sydney Opera House

 

TARGET 100 put the industry’s sustainability credentials on the agenda of 2200 city intellectuals at the TEDx ideas festival held at the Sydney Opera House last week. MLA sponsored a lunchtime session under the Target 100 banner to discuss the sustainable production of Australian beef and lamb including cattle producer Rob Lennon, Feather & Bone’s Grant Hilliard and OzHarvest founding director Ronni Khan, facilitated by food blogger Sarah Wilson. The discussion included a focus on respecting the source and effort put into producing meat by using secondary cuts and minimising waste, with a carving display of a full 300kg carcase that was used to prepare dinner for the attendees. Under the ‘crowd farmed’ banner, all the food at the event was locally sourced from hundreds of farmers, growers and gardeners. TEDx Sydney was the fourth local event that has become one of Australia’s leading forums to discuss ideas, innovation and creativity. It is based on attendees having an experience similar to the US-based ideas website Ted.com. MLA community engagement manager, Elise Vale, said that the sessions received excellent feedback. “With a program that featured an eclectic mix of artistic, scientific and social thinkers, TEDx was a great opportunity to connect with Sydney’s thought leaders,” she said. “Some of the great comments that we recorded highlighted how many of those attending the session now better appreciate the sustainability initiatives being undertaken by producers.”

Targeting students

New Target 100 resources are also bringing solid facts about Australia’s cattle and sheep industries’ environmental performance into classrooms. The Target 100 Study Guides for high school teachers were developed by MLA, in conjunction with Cosmos magazine. The guides profile industry researchers who are working in the industry, and farmers who are doing their bit for sustainability. Three Target 100 Study Guides are planned and are expected to ultimately reach up to 130,000 students. The first, covering water efficiency, was released in March, with 2000 copies distributed to schools across Australia. The other study guides will focus on carbon emissions and biodiversity.

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