US - Beef trim prices spent most of 2015 in a downtrend as supplies of imported beef from Oceania climbed to the highest levels in over ten years, write Steve Meyer and Len Steiner.
Prices began to stabilise at the end of 2015. Domestically-produced beef trim began to rebound first, followed by prices for imported product 30 days later.
US cow slaughter declined four per cent during 2015, the lowest since 2005. Cow slaughter is expected to bounce back this year by about five per cent, but so far has been unable to post much of an increase.
During the January-March quarter, cow kill was only up two per cent, with most of that increase accountable to an extra kill-day due to Leap Year. Meanwhile, shipments of beef from Australia declined 18 per cent, with March shipments down 22 per cent.
Beef imports from New Zealand were above a year earlier during the first two months of the year but imports in March were down 22 per cent, the same as Australia.
Rising trim meat prices in February were a precursor to the lack of physical trade volume in March, with Australia-New Zealand beef trim prices (ANZ in top graph) rising at a faster pace than US prices.
Beef trimmings prices during March for domestic product were steady, while imported product prices gave back some of the gains from February.
At the same time, choice beef cutout values were trending lower in February with a bit of a recovery in value during March. During April, the choice beef cutout value has failed to sustain the momentum of March while imported beef trimming prices have recovered.
In fact, imported 85 per cent lean beef prices for delivery 16-45 days out reached the highest values of the year in the first week in May and spot market prices for this product were at the prior highs.
Beef production in Australia for the latest reported month (February) showed a 13 per cent decline from a year earlier, following an 18 per cent decline in January.
The decline in shipments of beef from Australia to the US fits with a decline in Australian beef production and US prices that had been declining in late 2015.
The decline in beef production is driven by cow and heifer slaughter in Australia that was down 26 and 24 per cent from January and February of a year earlier.
The cattle and beef market outlook for Australia from Meat and Livestock Australia, dated in April, calls for beef production to be down 13 per cent this year, based on a 16 per cent decline in slaughter.
Beef exports for 2016 are projected to be down 18 per cent from last year, the same as the decline in shipments of beef from Australia to the US during the first quarter of 2016.
Given the distribution of imported beef to the US from Australia last year (see middle graph), bigger percentage declines should be expected from April through September.
The rebound in price quotes for Australia-sourced trim in recent weeks is consistent with the prospects for less beef supply available to the US by way of the imported product market.
TheCattleSite News Desk