US Imported Beef Market A Weekly Update

Transcription

1 US Imported Beef Market A Weekly Update Prepared Exclusively for Meat & Livestock Australia - Sydney Volume XVIII, Issue 20 May 24, 2018 Prepared by: Steiner Consulting Group SteinerConsulting.com service@steinerconsulting.com Market Highlights for the Week: Memorial Day is the most important beef consumption holiday of the year and end users are keenly focused on clearance during the long holiday weekend While features for June have already been planned out, there uncertainty what the focus of retailers will be in July, with ample supplies of inexpensive pork and chicken but also large planned cattle slaughter Fed cattle supplies are currently 5.1% higher than a year ago. Supplies of market ready cattle are expected to we significantly higher than a year ago in the next three months, which should continue to support high fed cattle slaughter and an increase in beef production Beef cow slaughter numbers escalating while dairy cow slaughter is seasonally lower, especially following improvement in dairy markets Fed cattle slaughter for the week ending May 25 was estimated at 520,000 head, 3.1% higher than a year ago. Nonfed slaughter for the week was estimated at 127,000 head, 7.6% higher than last year CME fed cattle futures rallied earlier in the week on strong beef wholesale prices and robust packer margins Imported Market Activity for the Week Imported beef prices were steady this week as overseas suppliers continue to hold firm in their offer prices and largely passed on lower US bids. US end users were comfortable sitting on the sidelines, focusing on sales over the long holiday weekend and inventory positions. Lean grinding beef prices in the US have been strong despite the increase in cow slaughter (see next page). However, seasonally domestic lean beef demand may start to wane as retailers diversify their offerings in the meat case. Retailers have largely planned out what their features will be in June and their main focus is on July. With plentiful (and cheap) pork and chicken, ground beef is likely to face increasing competition. It would seem to us this is part of the reason why large us- BEGINNING OF MONTH INVENTORIES, 000 HEAD 11,900 11,700 11,500 11,300 11,100 10,900 10,700 10,500 10,300 USA MONTHLY FED CATTLE INVENTORIES, HEAD CAPACITY FEEDLOTS May % June Steiner Est. +3.1% 10,100 9,900 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 5-Yr Avg

2 VOLUME XVIII, ISSUE US IMPORTED BEEF MARKET PAGE 2 ers of imported beef are unwilling to bid aggressively on prices, option instead to cover only short term needs. Prices for domestic round cuts have beef especially firm and this continues to underpin pricing for imported product. Strong Asia demand also has limited availability. Lean premiums are high and the price of 100VL product continues to outperform forecasts. Highlights for the week: THOUSAND HEAD US WEEKLY BEEF COW SLAUGHTER Cow slaughter: As we noted last week, poor pasture conditions and increasing drought pressure appear to be forcing producers to cull more beef cows. If conditions persist, we could see beef cow slaughter increased by double digits for much of the summer. Beef cow slaughter in the four weeks ending May 12 averaged around 60,400 head/wk, 13.5% higher than a year ago. Dairy cow slaughter seasonally declines into the summer and that has been the case again this year. Class III milk futures for September are currently 9% higher than at the start of the year and the improvement in profitability has also limited the culling of the dairy herd. Dairy cow slaughter in the last four reported weeks has averaged 57,500 head/wk, 3.4% higher than last year. Overall dairy and cow slaughter in the last four weeks has averaged 117,800 head/wk, 8.3% higher than last year. Preliminary data shows that cow slaughter in the second half of May was around 7% higher than a year ago, with beef cow slaughter likely contributing the bulk of the increase. Cattle on Feed: According to the USDA survey of head capacity feedlots, April placements were down 8.3% compared to a year ago. Higher placements earlier in the year and lower feeder cattle imports contributed to the decline in placements. We think placements in May could be down another 5% compared to year ago levels. The decline in placements during March/April and likely May should be seen in the context of higher placements late in 2017 and The supply of cattle outside feedlots on January 1 was estimated to be some 607,000 head (-2.3%) lower than the previous year. And yet, placements in January/ February were up a combined 210,000 head or +5.7%. In March/April placements declined a combined 349,000 head or -8.8%. Year to date cattle placements are down 1.8% compared to the same four month period a year ago. Despite the THOUSAND HEAD YEAR AVERAGE Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec US WEEKLY DAIRY COW SLAUGHTER 5 YEAR AVERAGE Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Class III Milk Futures September 2018 Contract lower placements of the last two months, cattle on feed numbers remain above year ago levels. According to USDA the total on feed inventory on May 1 was million head, 5.1% higher than a year ago. In the short term the supply of cattle that

3 VOLUME XVIII, ISSUE US IMPORTED BEEF MARKET PAGE 3 will be market ready remains significantly above year ago levels. We estimate that on May 1 the supply of cattle that had spent more than 150 days on feed was 50% higher than a year ago and 13% higher than the five year average. This does not necessarily mean feedlots are backed up. Rather, it reflects the fact that feedlots placed a fair amount of calves on feed last fall and they normally need more days on feed to hit market weight. Having said this, the clock will be ticking on a number of these animals and there should be more market ready cattle available in June, July and August. It is critical that feedlots maintain their marketing rate. If they do, then there is a good chance that feedlots will maintain currentness and go into the fall with a much better bargaining position. In 2012 feedlots were able to maintain marketings into July and August, setting the stage for a strong rally into Q4. Depending on how slaughter progresses this summer we could see a similar situation develop again this year. There are more cattle on feed than last year but lower placements in recent months and a robust marketing rate should lower total on feed supplies as we go into the fall. Marketings this summer remain critical. Packer margins have been excellent and that means a robust marketing rate in the short term. If demand remains strong, we expect slaughter numbers to stay above year ago levels. Eventually the high marketing rate will help clean up the large inventory of market ready cattle available this summer. Futures hold a premium for Q4 cattle. That is warranted. If marketings stay firm, that premium may increase further. Retail Ground Beef/Memorial Day Features should be near their annual peak in the next few weeks as retailers capitalize on warmer weather and increase in backyard grilling. Memorial Day (last Monday in May), Father s Day (mid June) and 4th of July (Independence Day) all are key beef consumption holidays and ground beef is the most accessible beef offering in the meat case. According to USDA, the ground beef feature index for the week ending May 25 was 26,830, down from 27,590 a year ago but seasonally higher compared to February and March levels. Weekly Ground Beef Retail Activity Index. USDA National Retail Report Source: USDA Weekly National Retail Report. Latest data point is for May 25, ,000 30,000 25,000 20,000 15,000 10,000 5-Yr Avg Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

4 VOLUME XVIII, ISSUE 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 24-May May May-17 from Last Year CME FEEDER CATTLE INDEX % % 25-May May May-17 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 XVIII, ISSUE 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 25-May May May-17 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 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 UNQ N/A Steer Knuckles UNQ N/A N/A

6 VOLUME XVIII, ISSUE 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 25-May May May-17 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 CL Trimmings UNQ N/A 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 XVIII, ISSUE 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 Domestic Cutouts 25-May May May-17 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 Direct Fed Steer (5-day accum. wt. avg. price)

8 VOLUME XVIII, ISSUE 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 25-May May May-17 Live Cattle Futures June ' August ' October ' December ' Feeder Cattle Futures August' September ' October ' November ' Corn Futures July ' / / September ' / December ' / March ' / / / Ch Wheat Futures July ' / September ' / / December ' / / / March ' / / / From Last Slaughter Information 7 Days Ending 7 Days Ending Week 7 Days Ending From Last Year 26-May May May-17 Total Cattle Slaughter 597, ,000-11, ,000 2, May-18 5-May May-17 Total Cow Slaughter 116, , ,036 8,096 Dairy Cow Slaughter 55,259 57,457-2,198 55, Beef Cow Slaughter 60,873 59,061 1,812 52,627 8,246

9 VOLUME XVIII, ISSUE US IMPORTED BEEF MARKET PAGE 9 TABLE 7 - US BEEF IMPORTS (Source: USDA/AMS) YTD Imported Fresh/Frz Beef Passed for Entry in the US week 20 5/20/2017 5/19/2018 Australia 80,987 78,740 (2,247) -2.8% Brazil 4,221 - (4,221) % Canada 90,757 99,921 9, % Chile (180) % Costa Rica 3,653 3,339 (314) -8.6% France Honduras Ireland % Japan % Mexico 71,075 71, % Netherlands New Zealand 77,521 84,377 6, % Nicaragua 18,252 21,538 3, % Spain Uruguay 13,337 13,160 (177) -1.3% Total 360, ,652 13, % Source: AMS - USDA US Beef Imports. Metric Ton. Data Source: USDA/Agricultural Marketing Service Imports as of May 19, 2018 Individual Country Volume. MT & Y/Y % Ch , , ,000 80,000 60,000 40,000 20,000 - TOTAL YTD: +3.8% Total 430, , , , , , , , , , , ,000 Total -3% 10% 1% 9% 18% -1% 3.8%

10 VOLUME XVIII, ISSUE US IMPORTED BEEF MARKET PAGE 10 Australian Beef Quota Position Metric Ton. Australian Department of Agriculture Statistics 24-May-18 Quota Shipments 102, % 2018 Quota 423,214 Balance 320, % USA Quota Entries through Week Ending May 21 Source: US Customs 500, , , , , YTD 2018 YTD % ch. Quota % cleared Australia New Zealand Uruguay Other 78,507,670 78,172,001 9,189,616 27,746,713 75,185,869 84,454,649 6,948,808 27,487,264-4% 8% -24% -1% 418,214, ,402,000 20,000,000 64,805,000 18% 40% 35% 42%