Thursday, 28 May 2020
There have been many significant challenges in the US beef market since March. Although, it may now be turning something of a corner. Most of the US processing plants hit by closures amid COVID-19 outbreaks are running again, albeit at reduced capacity for many.
Reports suggest that at the moment the market’s attention is wholly on processors’ ability to return to full capacity. Weekly beef production fell by around a third in April, and the steer price fell by over 20% to below $100/cwt (£1.79/kg lw). Wholesale beef prices skyrocketed, with the cutout value (the boxed beef carcase price) nearly doubling to $420/cwt (£7.50/kg). Although, it has since fallen back to just below $400/cwt (£7.15/kg) in the week ending 22 May.
US import data for March suggests Mexico, New Zealand, and to a lesser extent, Nicaragua, had begun to increase exports to the US. Market reports indicate that this pattern continued in April and May when beef wholesale prices continued to climb. Meanwhile at farmgate level, low margins and uncertain demand meant US feedlots quickly reduced placements in March and April. A significant and increasing number of cattle are now thought to be waiting to go onto feedlots. This had been weighing on the futures prices of feeder cattle, although they have shown more strength so far this week.
The prospect of the foodservice market reopening and the start of grilling season are both positive for the sector. But as always, it is the short term balance of supply and demand that determines prices and the US market may remain volatile for some weeks to come.
Earlier this year, our ambitions for exporting UK beef to the US took a positive step forward. Authorities agreed on equivalence standards on the UK’s disease control measures, following a three-week inspection that took place last year. Of course, work in this area continues, with the US ultimately still a valuable prospective market for UK beef, despite the current unprecedented global situation.
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