Trade

US imported grinding beef prices soften on December

Jon Condon, 31/01/2013

 

Imported lean grinding beef prices in the US have fallen about 12c/kg in local currency terms since the recent highs seen towards the end of last year.

A combination of factors appear to be in play, contacts said this week.

A general lack of buyer enthusiasm is evident in the US market, reflecting poor US retail beef demand, heavy trade in imported beef towards the end of 2012, and a sharp decline in US cattle prices during January.

Market watcher Urner Barry was this morning quoting imported 90CL cow, forward, at US214c/lb, up a little on lower prices seen earlier this week. Buying interest was reported as sporadic and trade volume, light.  

Steiner Consulting’s weekly US market report suggested imported beef prices traded for the most part sideways last week, while US domestic fatty (50CL) beef trimmings which had been hovering in the mid-70s (cent/lb) were down 13pc in value on Friday.

Market participants contacted in the course of the survey were notably less bullish than they were back in December, Steiner said.

“The lack of enthusiasm reflected a number of negatives that have developed so far this year, although most also acknowledge that it is still too early turn bearish on lean beef trim prices,” the weekly Steiner report said.

Firstly, US domestic lean grinding beef has for the most part traded sideways even as US cow meat supplies are modest.

“Some continue to talk about poor retail beef demand, and it is likely that may be the case given the relatively lower price of chicken breasts and pork loins at retail,” Steiner said.

“Many foodservice operators book product ahead of time and plan promotions accordingly. The sharply higher prices that were offered in Q4 for early 2013 delivery likely caused end-users to rein-in their promotion plans in favour of other proteins. This does not mean demand has changed, rather than at higher price points we have shifted up the demand curve, reducing the quantity demanded.”

The sharp decline in US cattle prices last week was seen as negative for lean beef prices as well.

End-users were not sure what direction the beef market will take going forward and some are taking a wait and see approach, Steiner said.

US end-users also are paying close attention to the cattle market in Australia, with a broad expectation that Australia will have more meat to sell and at some point supply will reach a point where Australian packers will lower offers in order to clear the market.

At this point the US is still seen as a primary destination for Australian lean and extra lean grinding beef.

US prices for fed round cuts have been very disappointing recently, and some items, like knuckles, are now trading at grinding values, suggesting a portion of them are going to the grinder, softening demand for imports.

“There is little question that the mood in the US grinding beef complex is not as bullish as it was a couple of months ago,” the Steiner report said.

“But despite all the negative sentiment, lean beef prices remain above year ago levels. US supplies of cow meat tend to decline into the spring as moisture conditions improve and this will offset the normal increase in imported beef supplies, driven by higher Australian/NZ slaughter,” it said.

“Overall US beef supplies are expected to be sharply lower in the first and second quarters this year, and this remains bullish for beef prices, in our view. So far, US cattle weights have been a key factor that has limited the declines in beef production. Those carcase weight gains should start to level off in the first half of 2013,” Steiner said.

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