April 22, 2010

Tight global supply drives US domestic beef prices up

Constraints in beef supply from dominant US import markets, such as Australia and New Zealand, coupled with a weakened US dollar are making the product relatively more expensive to US purchasers this year.

For the first two months of this year, US beef imports from Australia and New Zealand were 45% and 25% below 2009 levels, respectively. US imports from these countries are expected to pick up in the third and fourth quarters of this year as their currencies settle and more stock becomes available for export to the US.

US beef imports from Canada are expected to pick up some of the slack this year caused by tight export supplies in Oceania due to its herd rebuilding. US beef imports from Canada during January and February remained just above year-earlier levels at 138 million pounds, notable because imports from all other major suppliers of beef to the US are down.

Tight beef supplies in major US beef trading partner countries, combined with lower total domestic commercial beef production and a decrease in domestic cow slaughter this year, are likely to raise wholesale domestic prices throughout the remainder of the year.

Due to reduced imports, supplies of processing beef, a necessary ingredient to make ground beef, will continue to be especially tight, inevitably creating pressure on imported and domestic beef prices.