The US manufacturing beef market reached new highs this week, on both the domestic and imported front, driven by very tight recent US domestic cow slaughter in the wake of several years of drought.

Also boosting 90CL prices is the current record high US cattle prices, again due to the very tight supplies, MLA reports this morning.

As can be seen in Beef Central’s home-page graphs (click here), this week’s imported 90CL cow trim price, expressed in A$/kg, sits at a record A495.8c – within sight of the 500c/kg mark and close to $1/kg above prices this time last year.

Underpinned by the high prices, which for Australian exporters has been further improved by the weaker currency compared to year-ago levels, significant changes have occurred in the Australian beef trade matrix, MLA says. Shipments to the US are surging at rates not seen for many years, with the March volume projected to reach 29,000t for the first time since November 2008.

This also places the US on track to surpass Japan as the largest market, by volume for Australian beef for the second month in a row – a sequence that hasn’t happened since 2004. Assisted by an expectation of sustained demand from the US, shipments are likely to remain high for the coming months.

The imported beef trade in the US was reportedly a little slower this week, analysts said, with some buyers apprehensive about purchasing expensive beef that will need to be shifted through end-users in April and May. US retail beef prices lifted 4pc during February, and expectations are for this to continue through the spring.

There are concerns that the push-back from US consumers over price will come at some point in that period. Having said that, there was a similar situation at the end of 2013, however buyers realised they were going to be short of product and had to re-enter the market, Steiner Consulting said in its weekly imported beef report.

It is not just imported lean beef that is getting dearer, however, with domestic 90CL beef climbing past 260US¢/lb, and 50CL beef trim around 160US¢/lb, after having been 90US¢/lb at the beginning of the year. Imported 90CL beef was trading around 215US¢/lb CIF this week, slightly higher than the week before, and now 13¢ above year ago levels, when expressed in US$/lb terms.

“It’s not just the beef trade getting dearer – pork trim prices are significantly higher than this time last year, with 42CL trim doubling to 73US¢/lb and 72CL up 86.5¢ to around 131US¢/lb,” the Steiner report said.

US Cattle futures were also dearer this week, with most quotes to the end of 2014 pointing to a bullish market, despite both feeder and fed categories already being at record (or close to) prices.

US meat production down to start 2014

Meanwhile, US meat production during the opening 11 weeks of 2014 has been highly variable and, for the most part, much lower than expected, especially for poultry and pork, Steiner reported.

While beef production was always likely to be lower than last year due to expectations for cow and heifer retention and herd rebuilding, early estimates for strong pork production have been confounded by the rapid spread of the Porcine Epidemic Diarrhoea virus across most large US hog production areas. Poultry production has also been limited by poor chick survival and low placement rates (of chickens on feed).

The main result of this has been wildly fluctuating prices in US meat markets, with beef reaching records for many cuts and live indicators, the pork cutout rocketing up in the last two to three weeks and poultry being held up by the red meat price path.

Add the low production so far to the anticipated shortfalls through spring, and protein prices look likely to continue putting pressure on consumers and back through the supply chain.

• More analysis of current US market supply/demand dynamics on Beef Central next week 

Source: MLA, Steiner Consulting.