Friday, March 29, 2024

Nervous wait on backlogs

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The United States’ emergence from its economic slumber looks certain to rev up beef prices again this year. First though, large inventories built up during last year’s ports strike will need to be worked through.  Prices for imported cow and bull beef reached record highs of US$2.97/lb and US$3.17/lb respectively in November because of high consumer confidence and because the long-awaited rebuild in the domestic herd squeezed local supplies.
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No sooner had the records been set than an industrial dispute on the US West Coast ports brought prices tumbling again.

Prices for imported cow and bull beef sank to US$1.95/lb and US$2.20/lb respectively because wharves from Los Angeles to Seattle were crammed with containers. Laden ships waited two to three weeks to unload.

ANZCO’s general manager of sales and marketing Stuart Hall said as well as blocking imports the stoppages also meant US beef normally destined for Asia was fed back into the domestic market to compete with imported beef.

“That certainly contributed to the price pressure and those cold stores being extremely full over there.”

The dispute ended late in February and meat companies in New Zealand are nervously watching and waiting for the supply chain in the US to clear again in time for the peak demand summer barbecue season.

Hall said prices could stay down for two to three months while the backlogs cleared and massive supplies of Australian and NZ beef worked their way through the system.

Combined Australasian beef exports to the US in January were up 70% on the corresponding month a year ago because of ongoing drought across the Tasman and a more competitive Australian dollar, while a higher than normal cow cull in NZ in light of the slump in international milk powder prices also contributed.

The wave of Australian beef entering the US market could soon slow. Forecasts by the Australian Bureau of Agricultural and Resource Economics early in March were for Australian cattle slaughter numbers to peak in the year to July 2015 at 9.5 million head before declining to 8.9m the following year as farmers rebuild herd numbers.

A similar picture is emerging in the US cattle industry with farmers responding to higher prices by slaughtering fewer animals and building numbers again after the country’s herd reached its lowest level in 58 years.

Trade talks between the US and the European Union, which could lead to further lifting of restrictions on beef from the continent are due to be completed by 2016 but trade watchers say that timetable could easily slip. Imports of EU beef into the US are restricted to 30,000t a year before punitive tariffs are applied. 

By comparison NZ’s annual beef quota for the US is 217,000t and Australia’s larger again.

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