US beef demand exceeds expectations

US beef demand exceeds expectations


Stock and Land Beef
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Aussie beef remains competitive in the US

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AUSTRALIAN beef’s competitive window in the United States is firmly open with local prices gaining and demand drivers for 2018 looking solid.

While the recovery of the US herd and corresponding surging beef supplies has created angst in other key export destinations for Australian beef, the strength of the US market itself has surprised many.

The 30-year per capita beef consumption decline in the US has made a sharp turnaround in the past 18 months, notching up a 4 per cent increase last year, with the United States Department of Agriculture (USDA) forecasting more growth to 2020.

Improved wages, higher household income levels, low interest rates and the economic optimism coming from the political sphere was very encouraging from a beef consumer perspective, Rabobank senior analyst animal protein Angus Gidley-Baird said.

Currency movements have also played to our favour.

Further, the stockpile effect of the massive drought-fuelled volumes Australia sent to the US through 2015 and 2016 has now eased.

US import prices are currently tracking close to where they were this time last year, after taking a correction mid last year.

A point to watch, according to Mr Gidley-Baird, will be the effects during the next six months of the large number of cattle currently on feed in the US.

“Feed prices are still very favourable in the US, making the cost of gain to lotfeeders low, so many might extend their programs which adds to their weights,” he said.

“The potential is demand for lean Australian product staying firm.”

On the other side, the US beef cow herd has increased. January figures showed a 2 per cent jump on the previous month to 31 million head.

At some point, the increased number of females will see cows start to come back onto the market and the US generating its own leaner product.

“However, our US colleagues do not expect the peak in US production to arrive until 2020-21,” Mr Gidley-Baird said.

The latest Meat and Livestock Australia (MLA) supplier snapshot on the US says the cattle herd was at 102.6 million head in mid-2017, up 7pc from where it bottomed out in 2014.

Increased production has meant more beef sent offshore, with major growth in shipments to Korea and Japan.

That has intensified competition in some of Australia’s most valuable markets, MLA analysts said.

Still, Australian beef recorded a year-on-year rise in exports to all markets for January.

Department of Agriculture shipment statistics show 60,800 tonnes shipped weight went out, 20pc up on January 2017.

To date, already 20,000t has gone out in February.

MLA’s 2018 cattle market projections pointed to a much more positive outlook in terms of international demand than this time last year, with key regions like the US and many parts of Asia registering improvements in household wealth, which generally flows through to an increase in protein consumption.

This, combined with natural population growth, should see beef consumption continue to expand on a global level, according to MLA.

The story US beef demand exceeds expectations first appeared on Farm Online.

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