US Imported Beef Market A Weekly Update

Transcription

1 US Imported Beef Market A Weekly Update Prepared Exclusively for Meat & Livestock Australia - Sydney Volume 19, Issue 6 February 8, 2019 Prepared by: Steiner Consulting Group SteinerConsulting.com service@steinerconsulting.com Market Highlights for the Week: Imported beef prices were notably higher last week on a combination of limited offerings from overseas suppliers, higher prices for domestic lean grinding beef and strong end user demand. New Zealand packers continue to report good demand in Asian markets and well sold positions into late March. Flooding in Australia has caused dramatic cattle losses, with news reports suggesting hundreds of thousands lost. If true, this could further reduce the June 30 inventory, which already was forecast 4% lower than previous year USDA forecasts 2019 US beef production in US up 2.8% vs. the previous year and per capita consumption up 1.9%. Despite supply increases in recent years per capita beef availability in the US market remains below 2010 levels. While beef domestic availability has yet to recover to 2010 levels, pork supplies are up 6% vs and chicken supplies are 11% higher, which helps explain some of the current weak pricing for these proteins. Imported Market Activity for the Week Imported beef prices were higher towards the end of the previous week and prices advanced steadily higher through much of the week ending February 8. By the time we conducted our regular weekly survey of market participants prices for some items were as much as a nickel (5 cents) higher than the week before. Limited offerings from overseas suppliers, higher domestic lean grinding beef values and stronger US end user de- mand all contributed to the firm trading in the imported beef complex. Market participants that we interviewed also noted that some traders may have been caught a bit short and are actively looking to cover needs. With tight spot supplies prices in the FOB market are grinding higher and replacement values overseas are well bid. New Zealand supplies continue to note that they see very strong demand from Asian markets at this time. While New Zealand data is published with a three week lag, Per Capita Consump on (Disappearance) of Beef, Pork and Chicken. Retail Weight Pounds per Person. Source: USDA. Analysis by Steiner Consul ng Beef Pork Broilers

2 VOLUME 19, ISSUE 6 US IMPORTED BEEF MARKET PAGE 2 participants note that weather conditions so far have been quite seasonable and cow slaughter has yet to pick up. Faced with well sold forward positions and no particular change in the supply situation New Zealand packers appear content to hold firm in their offerings and routinely passing on lower bids. Queensland Cattle Distribution. Source: MLA & ABS Map Link: goo.gl/yw7oev Australia floods/supply situation Floods in parts of Queensland have caused dramatic death losses. A report in the Guardian noted that some 300,000 cattle may have perished and other news reports noted losses were expected to be in the hundreds of thousands. It will likely take some time to fully understand the impact and it is possible we may never know exactly how many cattle were lost. As you read the many detailed accounts of the flooding impact, it is important to put the numbers in the broader context and recognize the effect this natural disaster will have on beef supplies in Australia. According to MLA data as of June 30, 2018 the total Australian cattle inventory was around 27.2 million head (Jan 2019 projections). Queensland accounts for around 43% of the Australian cattle herd, which would put the Queensland cattle numbers at around 11.7 million head. A loss of 300k head of cattle would represent 2.6% of the Queensland inventory and a 1.1% decline in the total Australian cattle supply. The map above was based on 2016 data but it offers a more detail breakdown of how Queensland cattle stocks is distributed. The two areas most affected by the flooding were the Southern Gulf, which in 2016 had about million head of cattle and North Queensland Dry Tropics, with around 1.3 million head. The precipitation map shows that some parts of the state received over 1200 mm of rainfall (47 inch), most of that coming in a 10 day stretch at the end of January and first week of February. But even as this part of Queensland struggles with torrential rainfall, many other parts of Australia, including some parts of Queensland, are suffering drought conditions. The result is continued liquidation of the cattle herd in addition to the stock losses due to flooding. Prior to the floods MLA was projecting the Australian cattle herd at the end of June 2019 to be 26.2 million head, 3.8% lower than the previous year. Following this natural disaster cattle numbers may decline by as much as 5% y/y although. The effect could be a notable reduction in beef supply availability from Australia in the second half of the year. Queensland Rainfall: Jan 1 - Feb 10 Source: Australian Bureau of Meteorology USDA updates 2019 Supply/Demand Projections Due to the government shutdown in late December and January USDA had to skip its monthly report on agricultural supply/demand projections. In the February report USDA offered some downward revisions in beef production and per capita disappearance, which brings the USDA forecasts a bit more in line with our forecasts presented in the MICA meetings last fall. We could see further revisions once USDA and private analysts receive the results of the semi-annual cattle survey that will be released on

3 VOLUME 19, ISSUE 6 US IMPORTED BEEF MARKET PAGE 3 February 28. One of the key numbers in the report is the per capita consumption calculation. It is important because it adjusts the production number by the normal population growth and also accounts for the effect of imports and exports on domestic supply availability. Beef prices that we track on a daily and weekly basis are for product that is traded in the domestic market and those prices are directly affected by domestic demand and the supply available in domestic channels. Beef prices to start the year have been quite robust while pork and chicken prices have been under pressure. The three charts on page 1 help put those price trends in some context. While beef supplies in the domestic market have increased in the last three years, per capita beef availability in 2018 was still about 4% lower than it was in On the other hand economic conditions and consumer incomes last year were significantly better than they were in 2010, hence the improvement in demand. Contrasting this beef supply number is the per capita availability (consumption) of pork in 2018, up 6% and per capita availability of chicken, up 11% since USDA currently expects per capita beef availability in 2019 to increase 1.9% from the previous year but remain below 2010 levels. This estimate will be greatly affected by trade flows and ultimately the supply of beef coming to market. Cattle weights to start the year have been well below year ago levels. Poor feedlot conditions could continue to hamper weights for much of Q1 and could affect supplies in Q2 as well. The cattle inventory data will shed light on the supply of feeders outside feedlots. Winter wheat may have been affected by extreme cold conditions this year and this may once again negatively affect the ability of producers to add more pounds on cattle outside feedlots. USDA is currently forecasting US beef production in 2019 to be 2.8% higher than a year ago. Beef imports are expected to be up 0.5% while exports are expected to be up 2.4%. There is a plausible case to be made that imports this year will be lower even with Argentina shipping some fresh product to the US. Reduced supply availability in Australia and New Zealand and strong demand in Asian markets will continue to limit imports from those markets. Additionally, we expect so see strong demand in Japan and S. Korea, especially if Australian supplies decline in the second half of the year. WEEKLY COW & BULL SLAUGHTER. '000 HEAD Source: USDA-AMS Yr Avg Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec USA Cattle/Cow Supply USDA has once again resumed reporting on the number of beef and dairy cows coming to market although it will take some time to bridge the gap in statistics that was created during the 35 day government shutdown. The latest data available is for the week ending January 5, showing total beef and dairy cow slaughter about 1% lower than the previous year. We think January cow slaughter numbers have been higher than a year ago but the rate of growth has slowed down. Bull and cow slaughter for the week ending February 9 was estimated at 131,000 head, 1.7% higher than a year ago. In the last four reported weeks non-fed slaughter has averaged 132,300 head/wk, slightly under year ago levels. With no appreciable increase in slaughter prices for lean beef have been trending higher, in line with the seasonal increase. Prices for 90CL boneless beef last week were near $210/cwt, $14 or 7% higher than at the end of Seasonally domestic lean beef prices move higher into April as foodservice demand improves and end users start to gear up for the start of the grilling season.

4 VOLUME 19, ISSUE 6 US IMPORTED BEEF MARKET PAGE 4 CME Cattle Feeder Index and US Cattle Markets Special Live Animal Reference Price Current Week Prior Week % CHANGE VS. Last Year WK AGO 7-Feb Jan-19 8-Feb-18 from Last Year CME FEEDER CATTLE INDEX % % 8-Feb-19 1-Feb-19 9-Feb-18 FED STEER (5-MKT AVG) % % CUTTER COW CARCASS, NATIONAL, 90% LEAN, LB. (carcass wt.) % % BONER COW CARCASS, NATIONAL, 85% LEAN, LB. (carcass wt.) % % BREAKER COW CARCASS, NATIONAL, 75% LEAN, 500+ (carcass wt.) % % CUTTER COW CARCASS CUTOUT, 5-DAY MA, USDA % % 260 CME Feeder Cattle Index Source: Chicago Mercantile Exchange

5 VOLUME 19, ISSUE 6 US IMPORTED BEEF MARKET PAGE 5 TABLE 2 IMPORTED BEEF PRICES, 7:45 DAYS, CIF From Last Current Week Prior Week Week Last Year From Last Year 8-Feb-19 1-Feb-19 9-Feb-18 US East Coast Australian/NZ Lean, CIF 95 CL Bull, E. Coast CL Blended Cow CL Shank CL Fores CL Chucks UNQ UNQ N/A UNQ N/A 95 CL Bull, W. Coast Uruguay CFH 90CL, E. Coast UNQ UNQ N/A UNQ N/A US East Coast, Trimmings, CIF 85 CL Trimmings CL Trimmings CL Trimmings UNQ UNQ N/A UNQ N/A 65 CL Trimmings UNQ UNQ N/A UNQ N/A US East Coast Australian Cuts, CIF Cap Off Steer Insides Steer Insides 14/18 UNQ UNQ N/A UNQ N/A Steer Flats UNQ N/A Steer Knuckles

6 VOLUME 19, ISSUE 6 US IMPORTED BEEF MARKET PAGE 6 TABLE 3 IMPORTED BEEF PRICES, 7:45 DAYS, US WAREHOUSE From Last Current Week Prior Week Week Last Year From Last Year 8-Feb-19 1-Feb-19 9-Feb-18 US East Coast Australian/NZ Lean, FOB US Port 95 CL Bull, E. Coast CL Blended Cow CL Shank CL Fores CL Chucks UNQ UNQ N/A UNQ N/A 95 CL Bull, W. Coast Uruguay CFH 90CL, E. Coast UNQ UNQ N/A UNQ N/A US East Coast, Trimmings, FOB US Port 85 CL Trimmings CL Trimmings CL Trimmings UNQ UNQ N/A N/A 65 CL Trimmings UNQ UNQ N/A UNQ N/A US East Coast Australian Cuts, FOB US Port Cap Off Steer Insides Steer Insides 14/18 UNQ UNQ N/A UNQ N/A Steer Flats UNQ N/A Steer Knuckles

7 VOLUME 19, ISSUE 6 US IMPORTED BEEF MARKET PAGE 7 TABLE 4 US DOMESTIC BEEF AND CATTLE PRICES Current Week Prior Week From Last Week Last Year from Last Year 8-Feb-19 1-Feb-19 9-Feb-18 Domestic Cutouts Low High Wt.Avg Low High Wt.Avg Low High Wt.Avg Choice Cutout Select Cutout Domestic Lean Grinding Beef 90 CL Boneless CL Beef Trimmings CL Beef Trim Domestic Pork Trim 42 CL Pork Trim CL Pork Trim Point of Lean Values 90 CL Domestic CL Beef Trimming CL Pork Trim CL Pork Trim National (5 day accum. Direct wt. Fed avg. Steer price)

8 VOLUME 19, ISSUE 6 US IMPORTED BEEF MARKET PAGE 8 TABLE 5 FUTURES AND SLAUGHTER INFORMATION From Last Futures Contracts Current Week Prior Week Week Last Year From Last Year 8-Feb-19 1-Feb-19 9-Feb-18 Live Cattle Futures February ' April ' June ' August ' Feeder Cattle Futures March ' April ' May ' August ' Corn Futures March ' / / / May ' / / July ' / / September ' / / / Ch Wheat Futures March ' / / / May ' / / / July ' / / September ' / / / From Last Slaughter Information 7 Days Ending 7 Days Ending Week 7 Days Ending From Last Year 9-Feb-19 2-Feb Feb-18 Total Cattle Slaughter 614, ,000 21, ,000 25, Jan Jan Jan-18 Total Cow Slaughter Data 0 Data , ,021 Dairy Cow Slaughter not not 0 0 available available 0 67,309-67,309 Beef Cow Slaughter ,712-57,712

9 VOLUME 19, ISSUE 6 US IMPORTED BEEF MARKET PAGE 9 TABLE 7 - US BEEF IMPORTS (Source: USDA/AMS) US Fresh/Frozen Beef Imports. Metric Ton. Data Source: USDA/Agricultural Marketing Service Imports as of February 2, 2019 Individual Country Volume. MT & Y/Y % Ch. 30,000 25,000 YTD Imported Fresh/Frz Beef Passed for Entry in the US week 5 2/3/2018 2/2/2019 Argentina - - Australia 20,669 20,316 (353) -1.7% Brazil Canada 22,243 27,208 4, % Chile Costa Rica % France Honduras % Ireland % Japan (13) -10.8% Mexico 17,915 19,818 1, % Netherlands New Zealand 20,021 13,390 (6,631) -33.1% Nicaragua 4,647 6,295 1, % Spain Uruguay 2,569 4,314 1, % Total 89,336 92,880 3, % Source: AMS - USDA TOTAL YTD: +2.0% Total 94,000 92,000 90,000 20,000 88,000 15,000 10,000 86,000 84,000 82,000 5,000-80,000 78,000 76,000 Total -2% 22% 11% -33% 35% 68% 4.0%

10 VOLUME 19, ISSUE 6 US IMPORTED BEEF MARKET PAGE 10 Australian Beef Quota Position Metric Ton. Australian Department of Agriculture Statistics 7-Feb % Quota Shipments 40, Quota 428,214 Balance 388, % USA Quota Entries through Week Ending February 4 Source: US Customs 500, , , , , YTD 2018 YTD Y/Y % Quota % cleared Australia New Zealand Uruguay Other 20,180,862 21,335,090 1,315,334 5,996,796 20,276,712 12,544,720 2,011,191 6,206,251 0% -41% 53% 3% 418,214, ,402,000 20,000,000 64,805,000 5% 6% 10% 10% Note: Customs did not provide an update this week. Data reflects last week s levels.

11 VOLUME 19, ISSUE 6 US IMPORTED BEEF MARKET PAGE 11 Online source: