November 27, 2003
Strong US Demand For New Zealand Beef
Record high beef prices in the US are attributed to tight domestic supplies and good demand, Meat New Zealand CEO Mark Jeffries said.
A reduction in supplies has resulted from the current phase of the US cattle cycle, in which cattle numbers are reaching a recurring low. Reduced US imports of beef and cattle from Canada and reduced beef exports by Canada to other countries have also contributed to strong prices.
Prices for imported bull beef are up 31% on 12 months ago at 125 cents per pound. The price in November 2002 was 95.5 cents US per pound.
Jeffries says the demand comes from a tighter than usual supply of live animals from Canada to the USA.
"At present the US border has only re-opened to Canadian beef, from cattle less than 30 months of age following the confirmation in May this year of a single case of BSE in the Canadian province of Alberta. In addition the US herd is at a 12 year low partially due to drought in key regions in recent years. Rebuilding is expected to commence slowly and this will have a further dampening effect on US beef supplies."
"Fast food chains such as Burger King are reporting increased sales compared with weak demand earlier this year. This increased demand shows a recovery in the US economy and a consequence of this is that people are feeling more confident about spending, so are eating out more."
Demand for US beef is strong due to rebound in beef consumption in Japan and strong markets in Korea, Mexico and Russia.
Jeffries says that even with the higher exchange rate at present, overall the prospects for New Zealand Beef exports to the US were good.
"Going into 2004, US winter production, export prospects and the timing of the resumption of imports of live cattle from Canada into the US will set the tone for the market. However, we are predicting prices for New Zealand Beef will remain firm into next year and that US demand for New Zealand Beef will also remain strong."