Weekly Beef Exports Down

7-18-14 – Weekly US beef export sales of 9,000 tonnes were down 50% in the week ended July 10 and 37% off from the prior four-week average, the USDA’s Foreign Ag Service reported Thursday.

Beef export shipments of 11,400 tonnes during the week were down 27% from the previous week and 24% from the prior four-week average, FAS said.

What’s more, the drop in weekly export sales establishes a new weekly low for the year and is the lowest since the week of March 10, 2012, when they were 8,054 tonnes.

What’s driving the decline isn’t real clear, but high prices and competition from Australia may be factors.  Australian cattle producers are in the middle of a drought-induced herd reduction, and meat is readily available for export to prime US markets like Japan.

With the US in the beginning phase of its herd rebuilding, supplies of lean grinding beef are tight, making for strong demand for Australia’s lean grass-fed beef.  The US now is the largest market for Australian beef exports.

That is a reversal of US beef exports in May when total volumes and value exceeded year-ago totals.  Beef exports in May were up 5% in volume at 227 million pounds and up 15% in value to $589 million.

And for the first five months of 2014, export volume was up 9% to 1.06 billion pounds, and value increased 17% to $2.64 billion.

 

PRIME BEEF COMMANDS PREMIUM VALUE

 

USDA data show cutout prices for USDA prime beef in May continued to rise significantly above that of branded, USDA choice or select.

The USDA cutout value for prime beef in June was $266.42 per cwt, a 2.36% gain over May’s $260.27.  Over the last 12 months, the cutout value of prime beef has risen 17.91% from $225.95 in July of 2013.

A comparison bar chart of the various cutout values shows prime beef continually well above that of all other grades.  For June, prime’s value of $266.42 per cwt is 12.03% above its nearest competitor branded beef, which was listed at $237.81.

It’s interesting that consumers are catching the vision that branded beef is better than average beef and are willing to pay more to get it.  In many cases, it is essentially USDA choice grade beef, but years of marketing are paying off.  However, in some cases, branded beef leans toward being prime in that the branded program has retained the pre-1975 marbling standards.

 

CASH CATTLE TRADE LIMITED

 

Cash cattle trading in the Central and Southern Plains Thursday was limited to a few thousand head in Nebraska at $248 per cwt on a dressed basis, about $1 lower than last week.

For the week, Plains states feedlots received mostly $155 to $156 per cwt on a live basis with a few instances of $157, all about $2 below last week.  On a dressed basis, this week’s trade ranged mostly from $244 to $247.

Wholesale beef prices were mixed Thursday, and this week’s variable price trends hinted that consumer buying interest is waning seasonally.

The USDA reported its choice beef cutout value Thursday at $249.81 per cwt, down $1.01, but its select cutout at $244.24, up $1.38.  The choice/select spread narrowed to $5.57, and there were 148 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the 7 days ended Wednesday was $214.11, down $2.01 as cattle come off summer pasture to the feedlots.  The Aug futures contract settled Thursday at $211.60, up $1.77, reversing Tuesday’s decline.

 

IN OUR OPINION

 

–Cash cattle prices put in a seasonal top two weeks ago and may remain challenged for another 30 to 60 days.

–Grain markets got a boost from the plane crash Thursday in Ukraine, which many believe was caused by a missile.  Wheat was the initial recipient of bullish fervor, but corn also got an early boost.  However, favorable growing conditions around the world likely will keep price gains in check.

–Pork prices remain historically high, but they continue to rise as the PED virus continues to churn through the industry.