The latest AgriHQ Sheep and Beef Monthly Report has revealed a sharp lift in imported grinding beef prices throughout the US, evidenced in recent weeks with US importers accepting higher prices in order to secure stock in the short term. Imported 95CL bull and 90CL cow have risen 22c/lb since early February.
The willingness of US importers to settle for higher prices has been driven by tighter supply with herd rebuilding in Australia reducing its cattle slaughter.
Early-season cattle kill in NZ has also contributed, which has restricted recent production.
Whether these recent price increases can be sustained is less certain, however.
“It is important to understand this has been driven by a lack of supply rather than any major movement in demand, which is much less rosy,” AgriHQ analyst Reece Brick said.
“Inventories across the US are thoroughly stocked with not only beef, but other proteins which are often used an alternative to beef, such as pork and chicken.”
In contrast to beef, there is no cause to celebrate in the sheep industry. International lamb markets are in much the same position as they were a month ago.
Interest in frozen products from the United Kingdom is still muted, and there is no anticipation of improved prices until at least May.
The state of the UK market is the most disappointing aspect of the current impasse. Wholesale frozen CKT leg prices remain well-below historic levels.
Trading is continuing to result in prices 70-90p/kg behind last years’ returns. These are the lowest prices recorded by AgriHQ for this time of year since 2008.
Brick said: “The UK market as a whole is suffering from weaker than usual consumption levels.
“Consumer demand for NZ lamb is not being helped by continued campaigns by UK famers for shoppers to opt for domestically produced lamb.
“Added to that, despite the anticipated easing of UK lamb production compared with 2015, numbers are expected to stay higher than the two previous years.”
Meanwhile, the main forequarter markets – the Middle East and China – are still unresponsive to more product offerings.
There is some evidence that inventories are being worked through in the Middle East, offering a glimmer of hope for the coming months.
“Increased competition from Middle Eastern buyers should place pressure on Chinese importers to pay more,” Brick said.
To read the full report, click here.
