Beef Prices Soar: A Controversial Move?
The Platts 95CL beef CIF US assessment has reached unprecedented heights, with prices hitting $3.48/lb or $7,672/mt on October 22nd, the highest since its launch in March 2024. This surge in prices has sparked debates and concerns within the industry.
While demand for lean beef trimmings remains low, a limited supply has kept prices afloat, according to industry sources. Caleb Hurst, a principal proteins analyst, sheds light on the situation, stating that higher lean beef prices were expected due to the domestic market's recent decline. He adds, "Until we see Brazil re-enter the market, relief on the import side may be limited."
And here's where it gets controversial... A trader reveals that domestic spot prices are under pressure due to weak demand, a typical seasonal trend. However, they also highlight an increase in dairy cow slaughter, a potential consequence of the government shutdown. This trader believes that the narrowing gap between imported and domestic beef, along with tariff news and geopolitical uncertainties, is slowing sales.
US President Donald Trump's announcement on October 16th, suggesting a plan to lower US beef prices, added fuel to the fire. His statement, followed by the mention of potential beef purchases from Argentina, alarmed US beef producers. This led to a ripple effect, pressuring futures and causing lean beef trimming buyers to pause import purchases.
But wait, there's more... A second trader notes that end-of-year shipment offers are limited, as sellers anticipate higher prices. In a typical year, buyers would wait for December-January, expecting a drop in prices due to Brazilian beef sales without tariff quotas. However, with new US tariffs on Brazilian beef, prices are unlikely to decrease.
The limited supply in the US, New Zealand, and Australia further supports import prices for lean beef trimmings. A third trader explains the expectations of low slaughter rates during the holidays and the good availability of 50's, contributing to the price support.
Jack Mullumby, a senior price analyst, provides insight into New Zealand's seasonal production and exports, which typically decline from August to October. He expects higher seasonal volumes from November to February but notes they may still fall below the five-year average.
Mullumby also highlights Australia's unique position, where beef exports to the US can buck the trend during the December-January holiday season. However, he cautions that this was not the case last year.
So, what does this all mean for the beef industry? With limited supply, rising prices, and potential import disruptions, the future remains uncertain. Will US beef prices continue to soar, and what impact will this have on the global market? These are questions that industry players and consumers alike are eagerly awaiting answers to. What are your thoughts on this beef price conundrum? Feel free to share your insights and opinions in the comments below!
