Spread between imported, domestic US 90s steadily shrinking

The market for imported manufacturing beef continued to trade very firm in the US once again this week, with prices higher for lean and extra lean grinding beef. End-users continue to struggle with very tight supplies of domestic lean cow grinding meat and record high prices for fed beef values.

The value of domestic 90CL boneless beef currently is pegged at US$3.00/lb. End-users that need product delivered to either the East or West coast need to pay anywhere between US8-12c for freight.

On the other hand, analysts Steiner Consulting pegged the value of imported 90CL frozen beef trim (FOB East Coast) at around US$2.90 – $2.93c/lb on Wednesday. The spread between domestic and imported beef has been steadily shrinking in recent weeks, in part because seasonally this is the time of year when supplies of imported beef tend to decline. Also, end-users have been depleting inventories for much of the summer given record high prices for grinding beef and now they have to rely on spot market to fill their needs. Consumer demand has been strong for much of the summer and Steiner sees little sign of weakness in the short term. While normally demand tends to soften modestly going into the fall, the primary driver remains supply.

Japan imports less frozen, but more chilled beef in July

03 September 2014

Japan imported 46,768t of beef in July, down 32pc from the very high figures in 2013, and 10pc below the five year average (data by Japan’s Ministry of Finance). The fall was due to a decline in frozen beef shipments, down 47pc year-on-year to 26,000t, while chilled beef intake improved by 4pc to 20,700t – the highest monthly volume since May 2013.

The significant reduction in frozen beef intake during the month was influenced by three key factors:  an extraordinary clearance volume in July 2013 (as importers had collectively avoided the tariff lifting safeguard system in the previous month); strong US prices (frozen brisket and plate averaged 15pc higher than 2013, at 433 yen/kg); and a 38pc decline in ‘other’ category from Australia (mostly manufacturing beef).

In comparison, chilled beef imports from both Australia and US improved by 6pc to 10,800t, and 3pc to 9000t, respectively, underpinned by the market’s slow but gradual economic recovery.

For the first seven months of 2014, beef imports into Japan totalled 283,800t, down 9pc from the same time previous year.

Tuesday daily cattle summary

02 September 2014

Numbers at Toowoomba Elders increased 39% week-on-week, with 1,009 head yarded. The market trended dearer, with a full panel of export processors, the regular feeder buyers and some restockers in attendance. Medium C2 yearling steers going onto feed averaged 200¢, up 7¢ on last week, and light C2 yearling heifers averaged 171¢, selling from 157¢ to 184¢/kg. Going to processors, C4 bullocks trended 4¢ dearer, averaging 208¢, and medium D2 cows were up 7¢ on 138¢/kg.

Tamworth yarded 1,413 head this week, up 1% on last week, with quality generally good and a full field of buyers in attendance. Consignments of MSA cattle attracted extra processor and lotfeeder competition, and restocker activity was heightened by improving seasonal conditions and warmer weather. Light C2 yearling steers going back to the paddock eased 2¢ week-on-week, averaging 212¢, and light C2 yearling heifers averaged 187¢, selling from 173¢ to 190¢/kg. Heavy C3 grown steers to lotfeeders averaged 213¢, making from 195¢ to 215¢, while heavy D3 cows increased 27¢ on last week, to average 177¢/kg.

Consignments to Wagga lifted 16%, with 5,910 head yarded, supported by strong numbers of yearling steers and heifers, grown steers and cows. Heavy C2 yearling steers going onto feed made 200¢, down 1¢ on last week, and heavy C3 yearling heifers to slaughter sold from 165¢ to 210¢, averaging 186¢/kg. Heavy C3 grown steers trended 6¢ dearer, averaging 202¢, while heavy D4 cows averaged 172¢, up 2¢/kg week-on-week.