Market Beef is still the leader in the US
The US beef complex is in transition as ranchers retain cows for breeding, Rabobank noted. Cow slaughter has declined 8% year-over-year decline to July. Australia, New Zealand and other countries have filled supply gaps. Imports of beef are up 32% with Australia and New Zealand imports accounting 59% of total US imports. But Rabobank says Australia and New Zealand will likely reach their quota limits for beef exports to the US by November. With reduced supplies from those countries, several factors will determine how US demand for beef will be met.
High cattle prices and low prices for feed are supportive of heavier animals. Also, a strong US dollar is dragging on exports which have declined 10% year-over-year to July, pushing some cuts of beef back onto the domestic market.
“As the US rebuilding process is not expected to begin to have a positive effect on production until sometime in 2016, demand for the imported product is expected to grow,” Rabobank said. “Furthermore, ongoing strength in the US dollar means product previously destined for export will need to be consumed domestically. This will support prices for blended product and ongoing imports of lean product.”
Additionally, stocks of beef in freezers increased 24% in July compared to a year ago, Rabobank said, suggesting there may be enough lean beef to curb any sharp increases in prices. “Together with the seasonal increase in the US cow cull that occurs over the fall, the US may be able to overcome any short-term slowdown in imports associated with the quota restrictions,” Rabobank noted.