TRUMP the trump if this is a possibility. The United States’ President, Donald Trump, used his first moment in office to defunk the Trans Pacific Partnership trade agreement, as he indicated he would pre-election.
The United States is Australia’s largest importer of meat with the larger percentage being 90CL grinding beef. The bulk of this lean meat is derived from our “chopper” dairy cows, and has been a great outlet for these cull cows.
Questions are still being asked if our cattle prices will hold up this year, and if so, for how long. The tearing up of the TPP agreement will form part of any future predictions, certainly on any long-term effect.
Currently, the cost to processors for export quality cattle is close to, or outweighing any profitable return. To this end, one of our largest export processors is continuing their contract kill, and their own personal kill is only for their preferred supply of grass assured bullocks.
MLA predicts the herd to increase three per cent this year, although most of this should not cause an effect until the following year when calving levels increase.
Potentially, the very good season and cheaper grain prices will create more of a problem producing heavier than normal carcasses, and therefore meat yields. Feedlots will be able to use cheaper grain to their advantage, but only if they can buy in cattle at prices that suit them better, especially for export consumption.
Trade cattle will survive better, but if export sales remain slow, then more boxed beef will hit the retail sector.
Now, thinking outside the square, the large tonnage of 90CL grinding beef (mince) that is imported into the US is used mostly in their hamburger production. As most of the cattle in the US are corn fed, the fat content is high. For the end user, the fast food hamburger chains, fat grinding beef losses too much in production, let alone being unhealthy.
Therefore, our lean mince is mixed with their fatty mince to reduce both of these effects. In my opinion, it is okay for President Trump to negate on agreement, but will their industry demands outweigh this recent decision?
As this is the backbone of our red meat exports, hopefully some common sense will prevail. On the other hand, if the tearing of the TPP agreement means that other Pacific countries need to import more of our beef, then this could be a big plus.
The US also imports prime heavy lamb, and some sheep meat too, and losing the TPP could have a larger effect of this part of our exports.
I am not even sure if this is relevant, but trade agreement or not, Ford Australia has recently closed, and General Motors are soon to follow. The supply of these companies vehicles will be made and exported from the US, so maybe trade agreements between Australia and the US could be negotiated away from our Pacific partners. Away from all of this, the retail trade may balk at further price increases for red meat, especially beef, Currently, one butcher’s representative has told me how quiet the butcher shop trade is. WIll the dominance of supermarkets have a bigger effect on cattle prices rather than export agreements.
There can be two sides to this story too. Take into consideration the Coles campaign for Australia Day, and discounting the price of lamb. Saleyard prices have improved 10-15 per cent.
