US - There is plenty of talk about higher cattle and beef supplies in the marketplace and its unfortunate corollary, lower prices, according to the latest Daily Livestock Report published by Steiner Consulting Group, DLR Division, Inc.
But how much of this is due to more beef coming from outside the US, be this in refrigerated or live cattle trucks? A quick look at the two attached chart shows that imports are not the reason why beef supplies are expanding in the US.
On the contrary, both beef and cattle imports are down in double digits. And it makes sense for US beef and cattle imports to be down. When US prices hit record high everyone wanted to sell into our market.
Today, the price of 90CL beef is under $2/lb. compared to $3 a couple of years ago and the price of cattle is near $1/lb. compared to $1.70 at the peak. Some of the markets that traditionally ship product to the US, be this Mexico and Canada for live cattle or Australia and New Zealand for beef, also do not have as much product to sell as they used to.
For those wondering where the data for these charts comes from, it is from regular, public USDA reports.
Beef imports: So far this year imports of fresh/frozen beef are down 14 per cent from the same period a year ago.
Imports from Australia, which last year was by far the top imported beef supplier, are down 39 per cent. And we will see even less imported beef from Australia coming in Q4.
Slaughter there is down 25 per cent from the year prior thanks to improved moisture conditions (most of their beef is finished on grass). And they are working hard to maintain volumes to other profitable markets, such as South Korea and Japan.
As a result, US is seeing a lot less beef, with shipments in the last four months alone (Jul‐Oct) down by more than 50 per cent from a year ago.
Beef imports from Canada have increased, in part because the favourable exchange offers marketing opportunities and imports from Mexico also are up. But the key here is not to cherry pick import numbers from one country or another.
In a box, 90CL beef trim from Canada, Mexico or Australia looks pretty much the same. The reality is we are buying less beef because we are making more of it here at home and also because some of our suppliers have less beef to sell.
The third chart shows how much feeder cattle prices in Australia have appreciated in the last two years. It’s probably a good lesson as to how dramatic short term price moves can be when supplies are tight and demand inelastic.
Cattle imports: Overall cattle imports from Canada and Mexico are down. Combined imports of feeder cattle and slaughter cattle from both countries so far this year are 1.261 million head, 276,061 head smaller (‐18 per cent) compared to the same period a year ago.
Imports of slaughter steers and heifers are up 74,326 head (+45 per cent), largely due to higher feedlot inventories in Canada in the first half of the year and the fact that it takes 75 US cents to buy 1 Canadian dollar. But we think slaughter imports from Canada will decline in Q4.
After all, the Canadian on feed inventory as of October 1 was down 17.7 per cent from the previous year. In May, their on feed stocks were up 8 per cent. But feeder imports are down, from both countries.
Bottom line: There is quite a bit more beef today than a year ago. Imports are not the reason why that is happening.
TheCattleSite News Desk