Beef 2024 Report

Transport costs would influence any prospect of Aussie feeder cattle entering US   

Jon Condon 13/05/2024

TRANSPORT cost would be a factor in any future prospect of Aussie feeder steers entering the United States, as the country enters a lengthy herd rebuilding phase after earlier drought.

That’s the view of US National Cattlemen’s Beef Association president Mark Eisele, speaking during the Beef 2024 event held in Rockhampton, Central Queensland last week.

NCBA president Mar Eisele

With the US beef herd at 50 year lows following drought, the combination of record high US feeder prices, relatively low cattle prices in Australia, and a favourable A$/US$ currency conversion have sharpened interest in possible live export trade over the next year or two. Earlier this year, a number of large US grainfed beef supply chains contacted the Australian industry about the prospect of importation of Australian feeders live.

The topic came up during questiontime at last week’s Rural Press Club breakfast attended by 700 stakeholders during Beef 2024.

Beef Central first raised the prospect of feeder steer live export to the US in this article back in March.  

US feedlot placements down sharply

As the US industry transitions to herd rebuilding after the impact of drought, feedlot placements were down 12.3pc in March, and expectations are for placements to be down in April as well. For the four weeks ended 26 April, total US feeder cattle sales were down 7.6pc from a year ago.

The US Cattle Futures market currently has feeder steers for August delivery around US250c/lb, although commentators at Beef 2024 – including Rabobank’s US-based analyst Lance Zimmermann – suggested the Futures market has not yet fully reflected the nation’s cattle shortage that lies ahead (see separate report).

“I would venture to say that the appetite for live cattle importation from Australia would depend on what segment of the industry you’re in,” NCBA’s Mark Eisele told last week’s gathering.

“Feedlots will have a shortage of cattle, and probably would welcome the prospect of access to Australian cattle.

“But the problem we (NCBA) see is maybe the cost of transportation. Live exporters would have to ship the cattle across the Pacific, and once they reached a US west coast port, the cattle would still have to be shipped to the US lotfeeding areas in the midwest, once they reached the mainland.

“Australia does live cattle shipment better than anybody, and we admire you for that. But I think a cost analysis is where we would need to be – because we do face a shortage of feeder cattle over the next few years, due to the (US) drought impact, but also because some older folks are getting out of the cattle business.”

“So we have a gap coming, and that may be one way to fill it.”

US cow herd recovery

Asked how the US cow herd recovery was going, Mr Eisele said he thought rebuilding would take place, but he thought that would happen “slowly and carefully.”

“I think with interest rates and markets being like they are, and drought being a factor, the rebuild will be slow. People will be cautious. Interest on money is probably the biggest thing for people buying cattle or running their operations.”

“I also believe there are some opportunities for young people to step into the industry – you can usually pay for things (ie land) better when cattle prices are higher, than when they are lower.”

“So there will be some opportunities there – but cost analysis will be the real judge of any live cattle trade out of Australia.”

Australia welcomes any new markets

Asked by breakfast moderator Kerry Lonergan if the Australian cattle industry would ‘welcome another market’ in any emerging live trade into the US, Cattle Australia president Garry Edwards said the industry would always welcome new markets.

“We are very fortunate to have global leading standards as far as shipping livestock around the world is concerned. We have a phenomenal record.

“But the challenge with this live export prospect discussion is that by the time we get organised, its likely the price has changed. We do all this work, and it actually never gets to an outcome,” Mr Edwards said.

“Ultimately we (Australia and the US cattle industries) are very aligned, and while we do compete, the North American market is one of our huge customers.”

The only Australian feeder cattle to have ever entered the US came via ‘the back-door’, consigned in 1991 to Mexico, where an active export protocol existed. They spent time in Mexico before being shipped into the US, lawfully, as part of larger Mexican feeder consignments.

 

  • NCBA president Mark Eisele and chief executive Kent Backus’s visit to Beef 2024 was initiated, managed and sponsored by the Rural Press Club of Queensland.

 

 

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