January 21, 2011

Australian floods drive global beef prices soaring high

The floods in Australia provided the main drive behind the global market's soaring beef prices while adjusting to a short-term reduction in availability of beef from that country.

US imported boneless beef prices have rocketed up by US$0.09/lb, beating previous records that occurred in July 2008 and prior to the global financial crisis.

Imported 90CL cow meat traded at US$1.94/lb by the end of the week while 95CL bull was selling for US$2.02/lb. These prices are US$0.10/lb and US$0.07/lb higher respectively than previous records.

The sharp price increases were also aided by beef futures prices escalating to record highs. This was due to an increase in corn futures prices as a result of the World Agriculture Supply and Demand Estimates showing a significant drop in the forecast supply of corn this year.

Despite the high overseas prices, meat companies in the North Island have mostly left prices unchanged this week. However, some South Island prices edged up US$0.05/kg-$0.10/kg.

Dairy commodity prices firmed last week with further price rises recorded for all commodities except cheddar. Cheddar prices are being curtailed by large volumes of product in the US. Demand for dairy products continues to be strong from all regions. Supplies have tightened due to poor weather conditions hampering milk production in most of the main dairy exporting countries. As a result of this, sellers are being cautious with the volumes of product which they are offering.

This week's globalDairyTrade (gDT) auction sees a 2,000-tonne reduction in whole milk powder on offer for the nearby delivery contract. The forecast supply of total product to be sold via gDT over the next year has also been reduced by 0.5%. Solid demand combined with the smaller volumes of product on offer would indicate prices remained firm at the gDT event.