Export processor sales and marketing desks report some subtle upwards movement in export grassfed rates last week, and a slightly more substantial lift in grainfed prices, as the effect of a lower A$ starts to have an impact.
The cautioned, however, that this was coming off a ‘low base’, and was still a long way from satisfactory.
Some of the earlier forecasts that export meat contracts after Easter might be ‘particularly hard going’ have not eventuated, but it remains to be seen how the market reacts when kill numbers rise, sources said.
The resurgent grinding meat trade into the US was well illustrated in statistics presented by Steve Meyer from Daily Livestock Report last week when he made comparisons in trade for the calendar years to date. Australia exported 42,147 tonnes of beef to the US for the 2012 year to April 9, compared with just 20,897t for the same period last year. That’s a 102pc rise, according to the US Customs Bureau statistics, but we are still a long way from threatening to trigger US quota levels above 330,000t.
In the US market, imported beef prices were generally steady last week but commentators noted a ‘firm undertone’, with prices expected to move higher this week following strong domestic values and tight US cow meat supplies.
Market participants suggested volumes of imported beef were moderate for this time of year. End-users continue to be cautious about beef needs going into late April and May where foodservice operators generally have to compete with retailers for lean grinding beef.
Analyst Ln Steiner’s weekly summary said on one hand, end-users recognise the need for additional lean beef, given the removal of LFTB from many formulations. Yet, they remained cautious that the negative press may have damaged overall ground beef demand going into the northern hemisphere grilling season.
The sharp decline seen in US cattle prices also made a number of domestically-produced round cuts more competitive with lean beef and some cuts that normally traded at premiums to grinding beef were now being sent to the grinder.
He used the following example. Last week USDA quoted Select Flats (Outside rounds) at US$1.7926/lb, about 28c/lb below the price of domestic 85CL beef trim. At these levels Select cuts could profitably go into the grinder and keep lean beef prices in check, he said.
“The problem with this is, what happens should cattle prices bounce back, especially if beef exports provide packers enough of a margin to bid-up cattle prices?” he asked.
US cattle futures were up the daily permissible limit last Thursday on precisely this speculation.
Advancing cattle and beef prices would underpin the lean beef complex and push prices for both domestic and lean beef higher, Mr Steiner said.
“We have argued that lean beef prices have the potential to be significantly higher into May and June, but not until we see firmer prices for live cattle. That may be starting to happen but we need to see a more sustained rally in cattle before revising forecasts higher,” he said.